As filed with the Securities and Exchange Commission on July 14, 1999
Registration No. _________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________
FORM SB-2
Registration Statement
Under the Securities Act of 1933
____________________________________
UBUYJAWS.COM, INC.
(Exact name of Registrant as specified in its charter)
Texas 5551 74-2918712
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)
208 Otis Drive Christopher C. Smith
Waco, Texas 76712 208 Otis Drive
(254) 776-3999 Waco, Texas 76712
(Address, and telephone number (254) 776-3999
of principal executive offices) (Name, address and telephone
number of agent for service)
Copies to:
Thomas C. Pritchard
Brewer & Pritchard, P.C.
1111 Bagby, 24th Floor
Houston, Texas 77002
Phone (713) 209-2911
Facsimile (713) 209-2921
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Being Offering Price
Aggregate Registration
To Be Registered Registered Per Share(1) Offering Share(1)
Fee
<S> <C> <C> <C> <C>
Right Unit 1,660,329 $5 $8,301,645 $2,308
Preferred Stock $0.001 par value 1,660,329 0 0
Common Stock $0.001 par value 2,490,494 0 0
$6.00 Warrants 0 0 0 0
$10.00 Warrants 0 0 0 0
Common Stock $0.001 par value,
underlying the preferred stock 1,660,329 0 0 0
Common Stock $0.001 par value,
underlying the $6.00 Warrants 1,660,329 $6 $9,961,974 $2,770
Common Stock $0.001 par value,
underlying the $10.00 Warrants 1,660,329 $10 $16,603,290 $4,616
TOTAL $9,694
</TABLE>
[FN]
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
</FN>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of or until the registration statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
<PAGE> 3
UBUYJAWS.com, Inc.
Distribution of 1,660,329 Right Units as a stock dividend
Great White Marine & Recreation, Inc. ("Great White"), our parent
company, has decided to distribute 1,660,329 right units, consisting of our
securities, as a stock dividend to Great White shareholders of record as of
_________, 1999. This distribution will constitute our initial public offering.
Each "Right Unit" when exercised will entitle you to the following
securities:
- One and one-half shares of our common stock;
- One share of our preferred stock;
- One five-year redeemable warrant to buy one share of our common
stock at a purchase price of $6.00 per share ("$6.00 Warrant"); and
- One five-year redeemable warrant to buy one share of our common
stock at a purchase price of $10.00 per share ("$10.00 Warrant").
On ___________, 1999, Great White will distribute one Right Unit for each
12 shares of Great White common stock you own on the record date. As part of
the rights offering, you will receive a Subscription Certificate, which you will
need to complete in order to receive the securities underlying the Right Units.
You will not be charged for the Right Units and neither we nor Great White will
receive proceeds from the distribution of the Right Units.
The Right Units will expire at 5:00 p.m., Eastern Standard Time, on
_________, 1999 (or 45 days from the date of this prospectus), at which time
they will become null and void unless extended or terminated by us in our sole
discretion. If you want to exercise your Right Units, we recommend that you
submit your subscription documents to the Subscription Agent before that
deadline or to your broker or bank at least 10 days prior to that deadline.
The Right Units will allow you to purchase securities from us at an
estimated price of between $3.50 an $5.00 per Right Unit. There is currently no
public market for the Right Units or the securities underlying the Right Units.
The Right Units may trade in the over-the-counter market until the close of
business on the day that immediately precedes the date on which the Right Units
expire. We have not established a minimum subscription of Right Units which must
be exercised in order to complete the rights offering.
Neither the NASDAQ Stock Market nor any national securities exchange
lists our securities. Prior to this offering, there has been no public market
for our securities. We can provide no assurance that a market for our
securities will develop.
This investment involves a high degree of risk. See "Risk Factors"
beginning on page 10.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
We intend to register the issuance of the securities included in the
Right Units in New York, Illinois, Florida, Colorado, and other states to be
determined by management. There can be no assurances that any of the
securities will be eligible for issuance or resale in such jurisdictions where
the issuance is not registered. If you do not reside in any of the foregoing
jurisdictions you will not be able to exercise your Right Unit and your Right
Unit will expire. However, you may trade your Right Unit to persons in
jurisdictions in which secondary trading is allowed pursuant to applicable
state securities laws, if any market for the Right Units develops.
The date of this prospectus is July 13, 1999
<PAGE> 4
TABLE OF CONTENTS Page
Prospectus Summary..................................................5
Risk Factors.......................................................10
Rights Offering....................................................22
Federal Income Tax Consequences of the Distribution................27
Use of Proceeds....................................................28
Dividend Policy....................................................28
Determination of Offering Price....................................28
Dilution...........................................................29
Capitalization.....................................................30
Management's Discussion and Analysis of
Financial Condition and Results of Operation.......................31
Business...........................................................33
Management.........................................................38
Principle Stockholders.............................................38
Description of Securities..........................................39
Plan of Distribution...............................................40
Disclosure of Commission Position on
Indemnification For Securities Act Liabilities.....................44
Market For Common Stock and Related Stockholder Matters............44
Experts............................................................44
Legal Matters......................................................44
Where You Can Find More Information................................45
<PAGE> 5
ABOUT THIS PROSPECTUS
You should only rely on the information contained in this
prospectus. We have not authorized anyone to provide you with information
different from that contained in this prospectus. The information
contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus.
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in
this prospectus. To understand this offering fully, you should read the
entire prospectus carefully.
KEY FACTS ABOUT OUR COMPANY AND THIS PROSPECTUS
Our Company We sell marine watercraft, recreational vehicles,
and related products via the Internet on our web
site located at www.UBUYJAWS.com primarily in
Central and Latin America. Our product lines
includes brand names such as Mercury, Polaris,
Viking Sport Cruisers, and Cruiser Yachts.
Our Address 208 Otis Drive, Waco, Texas 76712.
Our Phone Number (254) 776-3999.
Securities Outstanding
Prior to Distribution:
Common Stock 19,923,946 shares.
Preferred Stock No shares outstanding.
Warrants No warrants outstanding.
Securities Outstanding
After Distribution:
Common Stock 22,414,439 shares (assuming all Right Units are
exercised, does not include any shares which may
be purchased pursuant to the consulting agreement
discussed in "Plan of Distribution - Other").
Preferred Stock 1,660,329 shares convertible into an equal number
of shares of common stock (assuming all Right
Units are exercised).
$6.00 Warrants 1,660,329 $6.00 warrants to purchase an equal
number of shares of common stock (assuming all
Right Units are exercised).
$10.00 Warrants 1,660,329 $10.00 warrants to purchase an equal
number of shares of common stock (assuming all
Right Units are exercised).
Right Units to be Distributed 1,660,329 Right Units, which when
exercised will entitle you to one and one-
half shares of common stock, one share of
preferred stock, one $6.00 Warrant, and one
$10.00 Warrant.
Eligible Stockholders All Great White common stockholders of record as
of ________, 1999 will receive one Right Unit in this
rights offering for every 12 shares of Great White
common stock owned.
Expiration Date The rights offering will expire at 5:00 p.m.
Eastern Standard Time on ________, 1999.
Subscription Procedure To exercise the Right Units, you should carefully
complete and sign the Subscription Certificate
for the rights offering and forward it to our
subscription agent, American Registrar & Transfer
Company, whose address appears in the "Rights
Offering" section in this prospectus. Be sure to
include a check or money order for the full
amount of your subscription price. Checks and
money orders will not be cashed until we accept
your subscription. No interest will be paid on
subscription funds. Once you have submitted
subscription documents, your exercise of
subscription rights may not be revoked.
Persons Wishing to Exercise
Right Units for the Benefit of Others Brokers, banks, trustees, and other
individuals or entities that hold Great White common
stock for the account of others may, if authorized by
the beneficial owner, complete the Subscription
Certificate and submit it to the subscription
agent with the proper payment.
Completion of the
Rights Offering Certificates representing the individual
securities purchased upon exercise of the Right
Units will be delivered to subscribers as soon as
practicable after the expiration date of the
rights offering.
Termination We may cancel the rights offering at any time, in
which case we will return your subscription
payment without interest.
No Proceeds Neither we nor Great White will receive any
proceeds from this distribution. We will receive
proceeds from the exercise of the Right Units,
$6.00 Warrants, and $10.00 Warrants.
Market for Company
Securities There is currently no market for our securities,
and there is no assurance that any market will
develop. If a market develops for our securities,
it will likely be limited, sporadic, and highly
volatile.
<PAGE> 6
SUMMARY FINANCIAL DATA
The financial information presented below is derived from the
audited financial statements of UBUYJAWS.com for the period from
inception (February 10, 1999) through May 31, 1999.
Balance Sheet Data
<TABLE>
<CAPTION>
May 31 , 1999
<S> <C>
Total Assets $6,200
Long-Term Liabilities --
Stockholders' Equity $1,000
Period from Inception February 10, 1999
through May 31, 1999
<S> <C>
Statement of Operations Data:
Revenues --
General Administrative Expenses $5,200
Net Loss ($5,200)
</TABLE>
WHY THIS PROSPECTUS WAS SENT TO YOU
This prospectus is being delivered by Great White to you because
you owned Great White common stock on , 1999. This entitles
you to receive, at no cost to you, for each 12 shares of Great White
common stock you own a distribution consisting of one Right Unit
consisting of one and one-half shares of common stock of UBUYJAWS.com,
Inc., a development stage corporation, as well as, one share of
UBUYJAWS.com preferred stock, one $6.00 Warrant, and one $10.00 Warrant.
<PAGE> 7
QUESTIONS AND ANSWERS CONCERNING
THE RIGHTS OFFERING AND STOCK DISTRIBUTION
What Is a Right Unit?
A Right Unit consists of four parts:
-One and one-half shares of our common stock.
-One share of preferred stock. You will receive one share of
our ___% convertible preferred stock, which will be
convertible at any time into one share of our common stock.
We have the right to require you to convert the preferred
stock into common stock, if our common stock has traded at a
price of at least $15.00 per share for a period of 20
consecutive days.
-One $6.00 Warrant. When you exercise the $6.00 Warrant, that
means that you choose to purchase a share of UBUYJAWS.com
common stock at a purchase price of $6.00, on or before
______ , 2004. We have the right to "call" these warrants
any time after ________, if our common stock has traded at a
price of at least $10.00 per share for a period of 20
consecutive days.
-One $10.00 Warrant. When you exercise the $10.00 Warrant, that
means that you choose to purchase a share of UBUYJAWS.com
common stock at a purchase price of $10.00, on or before
______ , 2004. We have the right to "call" these warrants
any time after ________, if our common stock has traded at a
price of at least $15.00 per share for a period of 20
consecutive days.
What is the connection between Great White and UBUYJAWS.com?
Prior to this dividend we were a wholly-owned subsidiary of Great
White. We were formed by Great White to sell products, currently
distributed by Great White, over the Internet at our web site
www.UBUYJAWS.com.
Why Are We Engaging in This Distribution?
The dividend represents UBUYJAWS.com's initial public offering of
its securities, although it is different than a traditional offering in
that securities are directed only to eligible Great White stockholders.
We believe that the dividend has several advantages over a traditional
initial public offering. This type of offering gives us an opportunity
to offer our securities to investors who we believe, as Great White
stockholders, already have some interest in UBUYJAWS.com. We believe
this form of offering also is more cost effective than the traditional
method.
In addition, Great White's management supports the dividend because
they believe it will benefit Great White stockholders by:
-separating our business, with its own unique market opportunity
and risk/reward profile, from Great White's other traditional
distribution businesses, which should increase our financial
flexibility in the capital markets by allowing us to be viewed,
from an investor's perspective, as engaging in only Internet
business;
-enabling Great White stockholders to increase or decrease their
level of participation in our new business by varying their level
of investment in us;
-allowing Great White and us to pursue different operating
strategies, given our different business environments and
competitive market conditions; and
-permitting Great White to benefit from increases, if any, in the
market value of its retained equity interest in us.
<PAGE> 8
How Did We Arrive at the Price per Share of the Right Units and Warrants?
In determining the price per share for the Right Units and the
Warrants our board of directors did not employ any valuation formula or
obtain an independent valuation of our company. Rather, our board of
directors considered our business potential and prospects and our status
as a development stage company. As a result, this price bears no
relation to book value, earnings, assets or other generally accepted
valuation criteria for corporations. We believe that any valuation of
our company, given its early stage of development, is highly speculative.
The actual value or resale value of our securities may be significantly
higher or lower than the purchase price.
How Do I Exercise My Right Units?
To exercise the Right Units, you should carefully complete and sign
the Subscription Certificate for the rights offering and forward it to
our subscription agent, American Registrar & Transfer Company. Be sure
to include a check or money order for the full amount of your
subscription price. For more detailed information on the rights
offering, please read the "Rights Offering" section of this prospectus.
What If I Hold Great White Common Stock with a Broker or Through Others?
If your Great White common stock is held with a broker, dealer,
commercial bank, trust company, or other nominee, or you hold it
personally and would prefer to have such institutions effect transactions
relating to the Right Units or Warrants on your behalf, you should
contact the appropriate institution or nominee and request it to effect
the transactions for you. You should be aware that brokers or other
nominee holders may establish deadlines for receiving instructions from
beneficial holders significantly in advance of the date which we have
established for the expiration of the Right Units.
After I Exercise My Right Units or Warrants, Can I Change My Mind?
No. Once you send in your Right Units or Warrant Exercise Agreement
and payment, you cannot revoke the exercise of your Right Units or
Warrants even if you later learn information about us that you consider
to be unfavorable. You should not exercise your Right Units or Warrants
unless you are certain that you wish to purchase our securities.
How Much Money Will We Receive from the Right Units?
The amount of the net proceeds that we receive from the Right Units
will depend on the number of Right Units and Warrants exercised. If all
the Right Units are exercised, we expect our gross proceeds to be
approximately $________. If all the $6.00 Warrants are exercised, we
expect our gross proceeds to be approximately $9,961,974. If all the
$10.00 Warrants are exercised, we expect our gross proceeds to be
approximately $16,603,290.
How Will We Use the Proceeds from the Rights Offering?
The net proceeds received from the exercise of Right Units or
Warrants, if any, will be used to fund the development of UBUYJAWS.com
and for general corporate purposes.
<PAGE> 9
Can I Sell or Transfer My Right Units?
Upon the effectiveness of our registration statement with the SEC,
the issuance and sale of the Right Units will be freely tradable under
federal securities laws, assuming any market for these securities ever
develops. In addition, we believe the issuance of the Right Units will
be exempt from state securities laws. However, the Right Units may only
be sold to purchasers in states in which secondary trading of the Right
Units is allowed under applicable state securities laws, assuming any
market for these securities ever develops.
Are There Any Limitations on My Ability to Exercise the Right Units?
Yes. Although we have registered the issuance of the securities
included in the Right Units upon exercise of the Right Units under
federal securities laws, we may not be able to issue the securities upon
exercise of the Right Units in certain states. We intend to register the
issuance of the securities in New York, Illinois, Florida, Colorado, and
other states to be determined by management. However, we can provide no
assurance that we will be successful in registering the issuances in any
state. If you live in a state that has not approved the issuance of the
securities, you will not be able to exercise the Right Unit and the Right
Unit will expire worthless, unless you are able to sell the Right Unit,
of which there is no assurance that any market will develop.
If I Exercise My Right Units Can I Sell or Transfer the Securities
Included in the Right Unit?
Upon the effectiveness of our registration statement with the SEC,
the resale of the securities included in the Right Units will be freely
tradable under federal securities laws, assuming any market for these
securities ever develops. However, the securities may only be sold to
purchasers in states in which secondary trading of the securities is
allowed under applicable state securities laws, assuming any market for
these securities ever develops.
Where Will the Right Units, the $6.00 Warrants, the $10.00 Warrants, and
the UBUYJAWS.com Common Stock and Preferred Stock Trade?
There is currently no public market for our Right Units, $600
Warrants, $10.00 Warrants, our common stock, or our preferred stock. We
expect that the securities will trade in the over-the-counter market on
the OTC Electronic Bulletin Board. We can not assure you that a market
for our securities will develop or if it does develop that those markets
will be sustained.
Are Exercising My Right Units or Warrants Risky?
The exercise of your Right Units or Warrants involves a high degree
of risk. You should carefully consider the "Risk Factors" described in
this prospectus, beginning on page 10 before exercising your Right Units
or Warrants.
<PAGE> 10
RISK FACTORS
We have no operating history for you to evaluate.
We were incorporated in February 1999, and as of May 31, 1999, we
had not generated any revenues. Accordingly, as a development stage
company, we have no operating history on which to base an evaluation of
our business and prospects. You should consider our prospects in light
of the risks, expenses, and difficulties frequently encountered by
companies in their early stage of development, particularly companies in
new and rapidly evolving markets such as online commerce. Such risks
include, but are not limited to, an evolving and unpredictable business
model and the management of growth. To address these risks, we must,
among other things, establish a customer base, implement and successfully
execute our business and marketing strategy, continue to develop and
upgrade our technology and transaction-processing systems, improve our
web site, provide superior order fulfillment, respond to competitive
developments, and attract, retain, and motivate qualified personnel. We
can provide no assurance that we will be successful in addressing such
risks, and the failure to do so could have a material adverse effect on
our business. We can provide no assurance that we will become profitable
in the future.
We will need capital to execute our business strategy and after our first
12 months of operations we will have no external sources of funding.
We believe that our success will depend in large part on our
ability to:
- extend our web site name recognition,
- provide our customers with outstanding value, and
- achieve sufficient sales volume to realize economies of scale.
Accordingly, we intend to invest heavily in marketing and
promotion, site development and technology and operating infrastructure
development. As a result, we believe that we will incur substantial
operating losses for the foreseeable future, and that the rate at which
we will incur these losses will increase from current levels until we
generate substantial revenues. In view of the rapidly evolving nature of
our business and our limited operating history, we believe that
period-to-period comparisons of our operating results are not necessarily
meaningful and you should not rely upon such results as an indication of
future performance.
We commenced operations in July 1999 and we expect our operating
expenditures to be approximately $6,000 per month for the next 12 months
based on our current estimates. As of the date of this prospectus, we
had limited working capital, and we do not expect to generate substantial
cash flow from operations for the foreseeable future as we establish our
operations. As such, we intend to fund our monthly expenditures from
funding from Great White and from proceeds from the rights offering, if
any.
In exchange for our issuance of 19,923,946 shares of common stock
to Great White, Great White has agreed to fund our operations, this
offering, start-up costs, and overhead through at least the next 12
months totaling up to $122,000. Thereafter, we may need to raise
additional funds as a stand-alone company. In addition, although Great
White believes it will be able to fund our operations, it specifically
set aside cash in such amounts. In addition, Great White is currently
<PAGE> 11
subject to an SEC investigation that may further inhibit its ability to
provide required funding of our operations. If Great White is unable to
fund our operations for the term of our agreement we may need to raise
additional capital prior to the end of the initial 12 month period. At
this time we have no commitments for such capital, and accordingly, if
more funding is needed, we may have to curtail operations.
In addition, we may need to raise additional funds during the next
12 months in order to fund more rapid expansion, to develop new or
enhanced services or products, to respond to competitive pressures, or to
acquire complementary products, businesses, and technologies. If
additional funds are raised through the issuance of equity or convertible
debt securities, such financing may be dilutive, the percentage ownership
of our stockholders will be reduced, and such newly issued securities may
have rights, preferences, and privileges senior to those of our common
stock. We can provide no assurance that additional financing will be
available on favorable terms, if at all. If adequate funds are not
available or are not available on acceptable terms, we may not be able to
fund expansion, take advantage of unanticipated acquisition
opportunities, develop or enhance services or products, or respond to
competitive pressures.
We may be required to issue additional Right Units.
Due to improper bookkeeping by Great White's prior transfer agent,
Great White has had difficulty determining the total number of its common
shares outstanding. Great White believes that its current number of
shares of common stock outstanding is 19,923,946. However, if it is
determined that additional shares of Great White common stock are
outstanding, we may have to issue additional Right Units.
Our success is partially dependent on the success of Great White.
At the present time, we primarily sell products distributed by
Great White. As such, we are dependent on Great White to maintain their
relationships with manufacturers. The inability of Great White is
continue its relationships with manufacturers and to develop new
relationships with manufacturers could have an adverse impact on our
business. In addition, we are dependent on Great White to efficiently
and timely deliver the products we sell, and to provide all necessary
service and warranty maintenance which may be required. The inability of
Great White to adequately provide these services could have a negative
impact on our brand name and reputation, which would have an adverse
impact on our business.
Changes in consumer preferences may effect our profitability.
Our success depends, in part, on our ability to correctly and
consistently anticipate, gauge and respond in a timely manner to changing
consumer preferences. We are attempting to minimize the risks relating
to changing consumer trends by offering a wider variety of products,
analyzing consumer purchases of marine recreational vehicles and related
products, actively seeking new products, and increasing the monitoring of
sales of our products. However, a decrease in the consumer demand for
such products or any misjudgment of the market for any of our new
products, or our failure to correctly anticipate changes in consumer
preferences could have a material adverse impact on our business.
<PAGE> 12
We depend on key manufacturers to provide most of our product line, and
we do not have long term agreements with such manufacturers.
Our strategy has been to market products provided by a few well-
recognized brand product manufacturers. We nor Great White currently
have any long-term agreements with any manufacturers for our products.
In addition, Great White's current agreement with Mercury has expired and
they are in the process of renewing the agreement. The loss of one or
more of these manufacturers could have a material adverse effect on our
business. We expect to continue purchasing products from these
manufacturers, however we can provide no assurance that we will able to
do so on economically favorable terms, if at all.
We face intense competition in our industry, and since the products we
sell are discretionary purchases, we face competition from all leisure
and recreational products.
The retail market for recreational boating supplies is highly
competitive. We compete with other national entities in this industry
which have greater financial resources and managerial experience and
depth than us. In addition, a key competitive factor in the recreational
vehicle market is price. Competitive pressures resulting from
competitors' pricing policies may adversely affect our gross margins and
such pressures are expected to continue. There can be no assurance that
we will not face greater competition from other national or regional
distributors or that we will be able to compete successfully with
existing and new competitors.
The recreational vehicle and products markets are generally highly
competitive, with competition mainly centering on product innovation,
performance and styling, price, marketing, and delivery. We believe that
our future success will depend, among other things, upon our ability to
sell well received products. In addition, a major innovation by one of
our competitors could have a negative effect on the sales of one or more
of our product lines. Competition in sporting recreational vehicles and
products consists of a relatively small number of large producers, most
of whom have greater financial or other resources than us. The markets
in which we compete also face competition from other leisure activities,
and sales of leisure products are affected by changes in consumer tastes,
which are difficult to predict.
We depend on discretionary consumer spending.
Our success depends upon a number of factors relating to consumer
spending, including future economic conditions affecting disposable
consumer income such as employment, business conditions, interest rates,
and tax rates. In addition, our business opportunities are directly
dependent upon the level of consumer spending on recreational vehicles
and related products, a discretionary spending item. There can be no
assurance that consumer spending in general or spending in the
recreational vehicle market in particular will not decline, thereby
adversely affecting our future viability, net sales, and profitability or
that our business will not be adversely affected by future downturns in
the boating industry.
We risk product recalls or product liability due to the inherent dangers
involved the use of certain of our products.
The sale of marine watercraft and recreational vehicle products
entails a possible risk of product liability and product recall. We can
provide no assurance that persons will not assert product liability
claims against us, or that we or the manufacturer will not be obligated
to recall our products. Although we maintain product liability insurance
coverage, there can be no assurance that an adequate level of coverage is
presently in place or will be available in the future. Any losses that
we may suffer from future liability claims, including the successful
assertion against us of one or a series of large claims in excess of our
insurance coverage, may have a material adverse effect on us.
<PAGE> 13
As a start-up company, our future revenues will be unpredictable.
As a result of our limited operating history, lack of revenues, and
the emerging nature of the markets in which we compete, we are unable to
accurately forecast revenues, if any. Sales and operating results
generally depend on the volume and timing of any orders received, which
are difficult to forecast. We may be unable to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in revenues in relation to our
planned expenditures would have an immediate adverse effect on our
business.
As a start-up company, our quarterly operating results may fluctuate.
Based on our business and industry and as a start-up company, we
expect to experience significant fluctuations in our future quarterly
operating results due to a variety of factors, many of which are outside
our control. Factors that may adversely affect our quarterly operating
results include:
- our ability to attract new customers to our web site at a
steady rate and maintain customer satisfaction,
- our ability to operate at favorable gross margins,
- the announcement or introduction of new sites, services, and
products by us and our competitors,
- price competition,
- the level of use of the Internet and online services and
increasing consumer acceptance of the Internet and other
online services for the purchase of our products,
- the level of traffic on our web site,
- technical difficulties, system downtime, or Internet
brownouts,
- the amount and timing of operating costs and capital
expenditures relating to expansion of our business,
operations, and infrastructure,
- governmental regulation specific to the Internet and online
commerce, and
- general economic conditions and economic conditions specific
` to the Internet and online commerce.
<PAGE> 14
The demand for our products is seasonal, which may cause fluctuations in
our revenues.
Our business is seasonal because the sales volume of watercraft and
recreational vehicles tends to increase during the spring and summer
seasons and, to a lesser extent, during the fall and during periods of
warm weather in certain sections of the country. Unseasonable weather in
these quarters in different years could cause quarterly operating results
to fluctuate in the future. Accordingly, our results of operations for
any particular quarter may not necessarily be indicative of net income or
loss that may be expected for any other particular quarter. Significant
variability in orders during any period may have an adverse impact on our
cash flow, and any significant decrease in orders could have a material
adverse impact on our results of operation and financial condition.
Great White's control and interlocking directors and officers create
potential conflicts of interest with UBUYJAWS.com.
On each stockholder vote, our common stock is entitled to one vote
per share. Assuming all the Right Units and Warrants are exercised and
the preferred stock is converted, Great White will continue to own 72.7%
of our outstanding common stock, assuring that Great White will have
voting control of UBUYJAWS.com for the foreseeable future. As a result,
Great White's directors and officers will be able to control our
management and policies as well as the outcome of substantially all
matters submitted to the stockholders for approval, including the
election of directors and any proposed merger, liquidation, or amendment
to our charter.
In addition, our directors and executive officers also are
directors, officers, or employees of Great White and will receive Right
Units from this dividend based on their ownership of Great White common
stock. Specifically, Mr. Smith and Mr. Harvey are directors of Great
White and Ms. Ursrey is an employee of Great White. As a result, these
directors and executive officers have inherent conflicts of interest when
making decisions related to transactions between us and Great White.
Great White's ability to control matters listed above together with the
potential conflicts of interest of certain of our executive officers and
directors could adversely affect the trading price and liquidity of our
common stock. Also, Great White may delay or prevent a change of control
in our company, even if it would be beneficial to our stockholders.
These factors could limit the price that certain investors might be
willing to pay for our common stock in the future. If our board of
directors believes a conflict of interest exists, it will retain special
counsel.
In addition, those persons serving both UBUYJAWS.com as well as
Great White have not committed to devote any specific percentage of their
business time to us. The competing claims upon each person's time and
energies could divert his attention from our affairs, placing additional
demands on our resources. The efforts of all or any of these individuals
may not be sufficient to meet both our needs and those of Great White.
If we were deprived of access to certain key members of our management
team, or other personnel, or lose access to such services altogether, our
business could be materially adversely affected.
Our management has broad discretion over use of the proceeds of this
offering.
All of the net proceeds, if any, from the exercise of the Right
Units or Warrants will be available to fund development and for general
corporate purposes. As of the date of this prospectus, we cannot specify
with certainty the particular uses for the net proceeds to be received.
Accordingly, our management will have broad discretion in the application
of the net proceeds. The failure of management to apply such funds
effectively could have a material adverse effect on our business.
<PAGE> 15
We have not paid any dividends and we do not anticipate doing so in the near
future.
We have paid no dividends on our common stock and we cannot assure
you that we will achieve sufficient earnings to pay cash dividends on our
common stock in the near future. Further, we intend to retain earnings
to fund our operations. Therefore, we do not anticipate paying any cash
dividends on our common stock in the foreseeable future.
Penny stock regulations may decrease your ability to sell our common
stock.
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally
are equity securities with a price of less than $5.00. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the SEC that provides information about
penny stocks and the nature and level of risks in the penny stock market.
These disclosure requirements and others may have the effect of reducing
the level of trading activity in any secondary market for a stock that
becomes subject to the penny stock rules. Our securities may be subject
to the penny stock rules, and accordingly, investors purchasing
securities under this prospectus may find it difficult to sell their
securities in the future, if at all.
<PAGE> 16
Risks Relating to the Internet
Our business is dependent on the maintenance of the Internet
infrastructure.
Our success will depend, in large part, upon the maintenance of the
Internet infrastructure, as a reliable network backbone with the
necessary speed, data capacity, and security. To the extent that the
Internet continues to experience increased numbers of users, frequency of
use, or increased requirements of users, we can provide no assurance that
the Internet infrastructure will continue to be able to support the
demands placed on it or that the performance or reliability of the
Internet will not be adversely affected. Furthermore, the Internet has
experienced a variety of outages and other delays as a result of damage
to portions of its infrastructure, and such outages and delays could
adversely affect the web sites of customers utilizing our programs and
the level of traffic on such web sites. In addition, the Internet could
lose its viability as a form of media due to delays in the development or
adoption of new standards and protocols that can handle increased levels
of activity. If the necessary infrastructure, standards or protocols, or
complimentary products, services, or facilities are not developed, or if
the Internet does not become a viable commercial medium, our business
will be materially and adversely affected. Even if such infrastructures,
standards or protocols, or complimentary products, services, or
facilities are developed, we can provide no assurance that we will not be
required to incur substantial expenditures in order to adapt our
solutions to changing or emerging technologies.
<PAGE> 17
We risk capacity constraints on our web site.
A key element of our strategy is to generate a high volume of
traffic on our web site. Accordingly, the satisfactory performance,
reliability, and availability of our web site, and network infrastructure
are critical to our reputation and ability to attract and retain
customers and maintain adequate customer service levels. Our revenues
will depend on the number of visitors who shop on our web site and the
volume of orders we are able to fulfill. Any system interruptions that
result in the unavailability of our web site or reduced order fulfillment
performance would reduce the volume of goods sold and the attractiveness
of our products and services. We will likely experience periodic system
interruptions from time to time. Any substantial increase in the volume
of traffic on our web site or the number of orders placed by customers
will require us to expand and upgrade further our technology,
transaction-processing systems, and network infrastructure. We can give
no assurance that we will be able to accurately project the rate or
timing of increases, if any, in the use of our web site or timely expand
and upgrade our systems and infrastructure to accommodate such increases.
In addition, even if we are able to project such needs, we can give no
assurance that we will have sufficient capital to adequately and timely
expand or upgrade our systems and infrastructure.
There is a risk of system failure on our web site.
Our success, in particular our ability to successfully receive and
fulfill orders largely depends on the efficient and uninterrupted
operation of our computer and communications hardware systems.
Substantially all of our computer and communications hardware is located
at one location in Houston, Texas. Our systems and operations are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, and similar events. We do not
presently have redundant systems or a formal disaster recovery plan and
do not carry sufficient business interruption insurance to compensate for
losses that may occur.
In addition, despite the implementation of network security
measures, our servers are vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to
interruptions, delays, loss of data, or the inability to accept and
fulfill customer orders. The occurrence of any of the foregoing could
have a material adverse effect on our business.
We are dependent on the continued growth of online commerce.
Our success is substantially dependent upon the widespread
acceptance and use of the Internet and other online services as an
effective medium of commerce. Rapid growth in the use of and interest in
the web, the Internet and other online services is a recent phenomenon,
and we can provide no assurance that acceptance and use will continue to
develop or that a sufficiently broad base of consumers will adopt, and
continue to use, the Internet and other online services as a medium of
commerce. Demand and market acceptance for recently introduced services
and products over the Internet are subject to a high level of uncertainty
and there exist few proven services and products.
<PAGE> 18
In addition, the Internet and other online services may not be
accepted as a viable commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary network
infrastructure. To the extent that the Internet and other online
services continue to experience significant growth in the number of
users, their frequency of use, or an increase in their bandwidth
requirements, we can provide no assurance that the infrastructure for the
Internet and other online services will be able to support the demands
placed upon them. In addition, the Internet or other online services
could lose their viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of
Internet or other online service activity, or due to increased
governmental regulation. Changes in or insufficient availability of
telecommunications services to support the Internet or online services
also could result in slower response times and adversely affect usage of
the Internet and other online services. If use of the Internet and
online services does not continue to grow or grows more slowly than
expected, or if the infrastructure for the Internet and other online
services does not effectively support growth that may occur our business
would be materially adversely affected.
Our industry is subject to rapid technological change.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality, and features of our web site. The
Internet and the online commerce industry are characterized by rapid
technological change, changes in user requirements and preferences,
frequent new product and service introductions embodying new technologies
and the emergence of new industry standards and practices that could
render our existing web site and proprietary technology obsolete. The
development of web site and other proprietary technology entails
significant technical and business risks. We can give no assurance that
we will successfully use new technologies effectively or adapt our web
site, proprietary technology, and transaction-processing systems to
customer requirements or emerging industry standards. If we are unable,
for technical, legal, financial, or other reasons, to adapt in a timely
manner in response to changing market conditions or customer
requirements, our business would be materially adversely affected.
Online commerce security risks may effect our business.
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks. We
can provide no assurance that advances in computer capabilities, new
discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the methods used to protect
customer transaction data. If any such compromise of our security were
to occur, it could have a material adverse effect on our reputation and
.business. A party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our
operations. We may be required to expend significant capital and other
resources to protect against such security breaches or to alleviate
problems caused by such breaches. Concerns over the security of
transactions conducted on the Internet and other online services and the
privacy of users may also inhibit the growth of the Internet and other
online services, especially as a means of conducting commercial
transactions. To the extent that our activities or third-party
contractors involve the storage and transmission of proprietary
information, such as credit card numbers, security breaches could damage
our reputation and expose us to a risk of loss or litigation and possible
liability. We can give no assurance that our security measures will
prevent security breaches.
<PAGE> 19
Governmental regulation and legal uncertainties may effect our business.
We are not currently subject to direct regulation by any
governmental agency, other than regulations applicable to businesses
generally, and laws or regulations directly applicable to online
commerce. However, due to the increasing popularity and use of the
Internet and other online services, it is possible that a number of laws
and regulations may be adopted with respect to the Internet or other
online services covering issues such as user privacy, pricing, content,
copyrights, distribution, and characteristics and quality of products and
services. Furthermore, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection
laws that may impose additional burdens on those companies conducting
business online. The adoption of any additional laws or regulations may
decrease the growth of the Internet or other online services, which
could, in turn, decrease the demand for our products and services and
increase our cost of doing business. Moreover, the applicability to the
Internet and other online services of existing laws in various
jurisdictions governing issues such as property ownership, sales and
other taxes, libel and personal privacy is uncertain and may take years
to resolve. Any such new legislation, the application of laws and
regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws to the Internet could have
a material adverse effect on our business.
Risks Relating to the Exercise of the Right Units and Warrants
Our determination of the exercise prices of the Right Units and Warrants
was arbitrary.
The exercise price for the Right Units and Warrants was determined
by our board of directors and is not based on an independent valuation of
our company or its assets or other recognized criteria of investment
value, such as book value, cash flow, earnings, or financial condition.
The exercise prices, therefore, do not indicate that the common stock has
a value or can be resold. We cannot assure you that if a trading market
develops in our securities, that the securities will trade at prices in
excess of the exercise prices at any time.
There has been no prior trading market for our Right Units, Warrants,
common stock, or preferred stock and the market price of these securities
will likely be volatile.
Prior to this dividend, you could not purchase UBUYJAWS.com's
securities publicly. We intend to get symbols for trading of our Right
Units, our common stock, our preferred stock, our $6.00 Warrants, and our
$10.00 Warrants on the OTC Electronic Bulletin Board.
We cannot assure you that investors will develop an interest in any
of our securities so that any trading markets develop or, if trading
markets do develop, how active the trading markets will be or whether
they will be sustained. You should assume that any market that develops
will be limited and sporadic. The market price of our securities will
likely be volatile. A number of factors may affect the price and
liquidity of our securities, including:
- actual or anticipated fluctuations in our quarterly operating
results;
- operating results that vary from expectations as to our
future financial performance or changes in financial
estimates for us by securities analysts and investors;
- future sales or issuances of equity by us; and
- the operating and stock price performance of other comparable
companies.
<PAGE> 20
In addition, our securities may be followed by few, if any, market
analysts and there may be few institutions acting as market makers for
our securities. Either of these factors could adversely affect the
liquidity and trading price of our securities. Also, the stock market in
general has experienced extreme price and volume volatility that has
especially affected the market prices of securities of many Internet-
related companies.
You may suffer a potential loss of appreciation in our common stock if we
redeem our Warrants before you can exercise them for shares of our common
stock.
We may redeem the Warrants, at any time, upon notice of not less
than 30 days, at a price of $.01 per Warrant, provided that the closing
bid quotation of our common stock for 20 trading days prior to the date
the Warrants are called for redemption is: (1) $10.00 per share for the
$6.00 Warrants, and (2) $15.00 per share for the $10.00 Warrants. The
Warrants will be exercisable until the close of business on the date
fixed for redemption. Since we presently intend to call the warrants at
the earliest possible date, you should assume that we would call the
warrants for redemption if the criteria were met. This right will, if
exercised, force you to either exercise your warrants at a possibly
unfavorable time or to lose the benefits that may accrue to them as a
result of the increase, if any, in the market price of our common stock.
You may suffer a loss from your inability to exercise the Warrants for
our common stock due to the lack of a current prospectus, which is
required to exercise your Warrants.
We have undertaken to maintain a current registration statement
that will permit the public sale of the common stock underlying the
Warrants upon exercise of Right Units or the Warrants. The maintenance
of a current registration statement could result in substantial expense
to us. We cannot assure you that we will maintain a current prospectus
covering the shares of common stock underlying the Warrants. You will
have the right to exercise the Warrants for the purchase of shares of
common stock only if a current prospectus relating to such shares is then
in effect and only if the shares are qualified for sale under the
securities laws of the state applicable to you.
Potential loss from inability to exercise the Right Units to purchase the
component securities due to the offering being registered in a limited
number of states.
We intend to qualify the issuance of the securities upon exercise
of the Right Units for sale in New York, Illinois, Florida, Colorado, and
other states to be determined by management. However, we can provide no
assurance that we will be successful in registering the issuances in any
state. If you live in a state that has not approved the issuance of the
securities, you will not be able to exercise the Right Unit and the Right
Unit will expire worthless, unless you are able to sell the Right Unit.
We can provide no assurance that a public market will develop for any of
our securities.
<PAGE> 21
While the securities to be issued pursuant to this offering and
pursuant to any exercises of the Right Units or Warrants will be free of
restrictions and freely transferable, there is presently no market for
any of our securities, and we can provide no assurance that any market
will develop in the future. If a limited number of investors exercise
their Right Units, we may not have enough shareholders to receive a
trading symbol and to develop an active trading market. Accordingly, you
may not be able to sell your securities.
Substantial sales of our common stock could adversely effect our stock price.
Sales of a substantial number of shares of our common stock upon
the exercise of the Right Units or Warrants could adversely affect the
market price of our common stock by introducing a large number of sellers
to the market. Given the likely volatility that will exist for our
shares, such sales could cause the market price of our common stock to
decline.
After the dividend, and prior to any exercises of the Right Units
or Warrants, we will have 19,923,946 shares of our common stock
outstanding, consisting of the restricted shares of common stock issued
to Great White in July 1999. All of the shares of common stock to be
issued upon exercise of the Right Units and Warrants and the conversion
of the preferred stock, will be freely tradable without restriction or
further registration under the federal securities laws unless acquired by
our "affiliates," as that term is defined in Rule 144 under the
Securities Act of 1933. All of the shares acquired by "affiliates" will
be "restricted securities" under the Securities Act subject to
restrictions on timing, manner, and volume of sales of such shares.
You will experience immediate and substantial dilution.
The exercise prices of the Right Units and Warrants are expected to
be substantially higher than the net tangible book value of each
outstanding share of common stock. Accordingly, purchasers of common
stock upon exercise of the Right Units or Warrants will suffer immediate
and substantial dilution.
You should carefully consider the above risk factors and warnings
before making an investment decision. The risks described above are not
the only ones facing us. Additional risks that we do not yet know of or
that we currently think are not material may also have an adverse effect
on our business operations. If any of those risks or any of the risks
described above actually occur, our business could be adversely affected.
In that case, the price of our securities could decline, and you could
lose all or part of your investment. You should also refer to the other
information set forth in this prospectus.
<PAGE> 22
THE RIGHTS OFFERING
We are issuing Right Units, at no cost, to holders of outstanding
shares of Great White common stock on ________, 1999. Right Units will
not be distributed to Great White stockholders who did not hold Great
White stock as of ________, 1999. Each Great White stockholder will
receive one Right Unit for every 12 shares of Great White common stock
owned on _________, 1999.
Determination of Subscription Price
Prior to the rights offering, there has been no public market for
our securities. In determining the subscription price, we did not employ
any valuation formula or obtain an independent valuation of our company.
Rather we considered our business potential and prospects and the fact
that we are a development stage company. As a result, the price of the
Right Units or the Warrants bear no relation to book value, earnings,
assets or other generally accepted valuation criteria for corporations.
We believe that any valuation of our company, given its early stage of
development, is highly speculative. The actual value or resale value of
our securities may be significantly higher or lower than the purchase
price.
Expiration Date
The Right Units will expire at 5:00 p.m., EST, on _______ , 1999
(or 45 days from the date of this prospectus) unless we extend this
deadline. After expiration, unexercised Right Units will be null and
void and no longer exercisable by the holder. We will not be obligated
to honor any purported exercise of Right Units received by the
subscription agent after the expiration time, regardless of when the
documents relating to such exercise were sent. We will make a press
release notifying the public of any extension of the expiration time.
Subscription Privileges
Each Right Unit entitles you to receive, upon payment of $____ to
UBUYJAWS.com, Inc., one and one-half shares of our common stock, one
share of our convertible preferred stock, one $6.00 Warrant, and one
$10.00 Warrant. We will send you certificates representing the
securities that you purchase pursuant to your subscription privilege as
soon as practicable after the Right Units expire.
<PAGE> 23
Plan of Distribution and Subscription Agent
We have appointed our Transfer Agent, American Registrar & Transfer
Company, to assist with the rights offering in the role of subscription
agent. The subscription agent will hold all subscriptions received from
the exercise of the Right Units, and will be responsible for delivering
the securities to stockholders. We will pay the fees and expenses of the
subscription agent in connection with the rights offering.
You should deliver your Subscription Certificate, payment of the
subscription price and Notice of Guaranteed Delivery (if any) to the
subscription agent. The address to which these documents and payment
should be delivered is:
American Registrar & Transfer Company
P.O. Box 1798
Salt Lake City, Utah 84110
Exercise of Rights
You may exercise your Right Units by delivering to the subscription
agent, at or prior to 5:00 p.m., EST, on _____________, 1999 (or 45 days
from the date of this prospectus):
- a properly completed and duly executed Subscription
Certificate;
- any required signature guarantees; and
- payment in full of $____ per Right Unit to be exercised.
We may reject any subscription documents the subscription agent
receives after 5:00 p.m., EST, on ________, 1999, regardless of when the
documents were originally mailed.
Method of Payment
Payments for the exercise of the Right Units must be by check or
bank draft drawn upon a United States bank or postal, telegraphic or
express money order payable to UBUYJAWS.com, Inc. The subscription price
will be deemed to have been received by the subscription agent only upon
(1) clearance of any uncertified check, (2) receipt by the subscription
agent of any certified check or bank draft drawn upon a United States
bank or of any postal, telegraphic or express money order.
If paying by uncertified personal check, please note that the funds
paid thereby may take up to five business days to clear. Accordingly,
holders of Right Units who wish to pay the subscription price by means of
uncertified personal check are urged to make payment sufficiently in
advance of the date on which the Right Units expire to ensure that such
payment is received and cleared by such date and are urged to consider
payment by means of certified or cashier's check, or money order.
<PAGE> 24
Guaranteed Delivery Procedures
If you want to exercise your Right Units, but time will not permit
your Subscription Certificate to reach the subscription agent on or prior
to _______, 1999 (or 45 days from the date of this prospectus), you may
exercise your Right Units if you satisfy the following Guaranteed
Delivery Procedures:
- You send, and the subscription agent receives, payment in
full for each Right Unit being exercised on or prior to
_______, 1999 (or 45 days from the date of this prospectus);
- You send, and the subscription agent receives, on or prior to
_______, 1999 (or 45 days from the date of this prospectus),
a Notice of Guaranteed Delivery, substantially in the form
provided with the attached instructions, from a member firm
of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or
correspondent in the United States. The Notice of Guaranteed
Delivery must state your name, the number of Right Units that
you hold, and the number of Right Units that you are
exercising. The Notice of Guaranteed Delivery must guarantee
the delivery of your Subscription Certificate to the
subscription agent within three OTC trading days following
the date of the Notice of Guaranteed Delivery; and
- You send, and the subscription agent receives, your properly
completed and duly executed Subscription Certificate,
including any required guarantees, within three OTC trading
days following the date of your Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered
to the subscription agent in the same manner as your
Subscription Certificate at the addresses set forth above, or
may be transmitted to the subscription agent by facsimile
transmission, to facsimile number _________. You can obtain
additional copies of the form of Notice of Guaranteed
Delivery by requesting it from the subscription agent.
Signature Guarantees
Signatures on the Subscription Certificate must be guaranteed by an
Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the
Exchange Act, subject to the standards and procedures adopted by the
subscription agent. Eligible Guarantor Institutions include banks,
brokers, dealers, credit unions, national securities exchanges and
savings associations.
Signatures on the Subscription Certificate do not need to be
guaranteed if:
- the Subscription Certificate provides that the securities to
be purchased are to be delivered directly to the record owner
of such rights; or
- the Subscription Certificate is submitted for the account of
a member firm of a registered national securities exchange or
a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
Shares Held for Others
If you hold shares of Great White common stock for others, such as
brokers, trustees or depositories for securities, you should provide a
copy of this prospectus to the respective beneficial owners of those
shares as soon as possible, ascertain such beneficial owners' intentions
and obtain instructions with respect to the Right Units. If the
beneficial owner so instructs, you should complete Subscription
Certificates and submit them to the subscription agent with the proper
payment.
If you are a beneficial owner of Great White common stock held by a
holder of record, you should contact the holder and request the holder to
effect transactions in accordance with your instructions. Beneficial
holders should be aware that brokers or other record holders may
establish deadlines for receiving instructions from beneficial holders
significantly in advance of _______, 1999 (or 45 days from the date of
this prospectus).
<PAGE> 25
Ambiguities in Exercise of the Rights
If you do not specify the number of Right Units being exercised on
your Subscription Certificate, or if your payment is not sufficient to
pay the total purchase price for all of the shares that you indicted you
wished to purchase, you will be deemed to have exercised the maximum
number of Right Units that could be exercised for the amount of the
payment that the subscription agent receives from you.
Company's Decisions Binding
All questions concerning the timeliness, validity, form and
eligibility of any exercise of Right Units will be determined by us, and
our determinations will be final and binding. We reserve the right, in
our sole discretion, to waive any defect or irregularity, or permit a
defect or irregularity to be corrected within such time as we may
determine, or reject the purported exercise of any Right Unit.
Subscriptions will not be deemed to have been received or accepted until
all irregularities have been waived or cured within such time as we
determine in our sole discretion. We reserve the right, in our sole
discretion, to reject any purchases not properly submitted or the
acceptance of which would, in the opinion of our counsel, be unlawful.
Neither Great White, UBUYJAWS.com, nor the subscription agent will be
under any duty to give notification of any defect or irregularity in
connection with the submission of Subscription Certificates or incur any
liability for failure to give such notification.
Withdrawal Rights
We may withdraw the rights offering at any time prior to or on
_________, 1999 (or 45 days from the date of this prospectus), for any
reason. If we withdraw the rights offering, any funds received will be
promptly refunded without interest or penalty.
The instructions accompanying the Subscription Certificate should
be read carefully and followed in detail. Do not send Subscription
Certificates to Great White or to UBUYJAWS.com. The method of delivery
of Subscription Certificates and payment of the subscription price to the
subscription agent will be at the election and risk of the Right Units
holders, but if sent by mail, it is recommended that such certificates
and payments be sent by registered mail, properly insured, with return
receipt requested, and that a sufficient number of days be allowed to
ensure delivery to the subscription agent and clearance of payment at or
prior to 5:00 p.m., EST, on _______, 1999 (or 45 days from the date of
this prospectus).
Transferability
As soon as practicable after the distribution of the Right Units,
the Right Units will be freely tradable, subject to applicable state
securities laws, until the day preceding the expiration date or
_________, 1999 (or 45 days from the date of this prospectus). We expect
the Right Units will trade on the OTC Electronic Bulletin Board for this
time period, assuming any market exists for the Right Units. During this
period, the securities underlying the Right Units will be freely tradable
(including the common stock underlying the Warrants), subject to
applicable state securities laws, but no market for such securities will
exist, even if the Right Units are exercised prior to the expiration
date. The underlying securities will trade separately on the OTC
Electronic Bulletin Board, subject to applicable state securities laws,
beginning shortly after the expiration date, assuming any market exists
for the securities.
<PAGE> 26
Method of Transferring Rights
It is anticipated that the Right Units will trade in the over-the-
counter market until the close of business on the last trading day prior
to the expiration of the Right Units. We can provide no assurance that a
market for the Right Units will develop, that any market which does
develop will be active or can be sustained or as to the prices at which
the Right Units will trade.
The Right Units evidenced by a single Subscription Certificate may
be transferred in whole by endorsing the Subscription Certificate for
transfer in accordance with the accompanying instructions. A portion of
the Right Units evidenced by a single Subscription Certificate (but no
fractional Right Units) may be transferred by delivering to the
subscription agent a Subscription Certificate properly endorsed for
transfer, with instructions to register such portion of the Right Units
evidenced thereby in the name of the transferee (and to issue a new
Subscription Certificate to the transferee evidencing such transferred
Right Units). In such event, a new Subscription Certificate evidencing
the balance of the Right Units will be issued to the Right Units holder
or, if the Right Units holder so instructs, to an additional transferee.
However, notwithstanding the foregoing, the subscription agent will
reissue Subscription Certificates for the transferred Right Units to the
transferee, and will reissue Subscription Certificates for the balance,
if any, to the holder of the Right Units, only to the extent it is able
to do so before the expiration of the Right Units. To transfer Right
Units to any person other than a bank or broker, signatures on the
Subscription Certificate must be guaranteed by an eligible institution.
Holders wishing to transfer all or a portion of their Right Units
(but not fractional Right Units) should allow a sufficient amount of time
prior to the expiration date for (a) the transfer instructions to be
received and processed by the subscription agent, (b) a new Subscription
Certificate to be issued and transmitted to the transferee or transferees
with respect to transferred Right Units, and to the transferor with
respect to retained Right Units, if any, and (c) the Right Units
evidenced by such new Subscription Certificates to be exercised or sold
by the recipients thereof. Neither we nor the subscription agent will
have any liability to a transferee or transferor of Right Units if
Subscription Certificates are not received in time for exercise or sale
prior to the expiration of the Right Units.
Except for the fees charged by the subscription agent (which we
will pay), all commissions, fees and other expenses (including brokerage
commissions and transfer taxes) incurred in connection with the purchase,
sale or exercise of Right Units will be for the account of the transferor
of the Right Units, and none of such commissions, fees or expenses will
be paid by us or the subscription agent.
No Minimum Subscription and Right to Terminate or Modify Rights Offering
The rights offering is not conditioned upon our receipt of
subscriptions for any minimum number of Right Units. Our board of
directors, in its sole discretion, may amend the terms and conditions of
the rights offering at any time prior to the expiration date. In the
event of such termination, we will return to all eligible Great White
stockholders who exercised their Right Units their subscription payments
without interest or deduction, as soon as practicable.
No Revocation
Once you exercise your Right Units, you may not revoke that
exercise. You should not exercise your Right Units unless you are
certain that you wish to purchase our securities.
No Recommendation
An investment in our securities must be made pursuant to each
stockholder's evaluation of such stockholder's best interests. Neither
the board of directors of Great White nor the board of directors of
UBUYJAWS.com makes any recommendation regarding whether stockholders
should sell their Right Units or whether to exercise such stockholder's
Right Units.
<PAGE> 27
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
We have received an opinion from Malone & Bailey, PLLC ("M&B
Opinion")to the effect that for U. S. Federal income tax purposes:
1. The Distribution is a taxable property distribution to the
shareholders of Great White. Thus, each shareholder must include
the value of the options he or she receives to purchase one or more
right units as gross income to the extent that such value exceeds
the basis in his or her Great White stock. However, because the
value of the option to purchase the "Right Units" is nominal, and
because any such value may be first deducted from the basis of any
Great White stock held by Great White shareholders before any
taxable income results, the tax consequences to any Great White
shareholder are nil.
2. The Distribution is not a taxable transaction to either
UBUYJAWS.com or Great White.
The M&B Opinion is subject to certain factual representations and
assumptions. UBUYJAWS.com is not aware of any present facts or
circumstances that would cause such representations and assumptions to be
untrue. In the event that either Great White or UBUYJAWS.com decides to
seek a letter ruling from the IRS with respect to the Federal income tax
consequences of the distribution, there can be no assurance that the IRS
will not take a position contrary to that expressed in the M&B Opinion.
If the valuation is changed by IRS, the tax consequences to Great White
or its shareholders could materially change.
You are urged to consult with your own tax advisor as to the particular
tax consequences to you of the distribution of our shares, including the
applicability and effect of any state, local or foreign tax laws, and of
any changes in the applicable laws.
OUR SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus, in particular
the "Risk Factors" and "Business" sections, discuss future expectations,
contain projections of results of operation or financial condition or
state other "forward-looking" information. These statements are subject
to known and unknown risks, uncertainties, and other factors that could
cause the actual results to differ materially from those contemplated by
the statements. The forward-looking information is based on various
factors and is derived using numerous assumptions. Important factors
that may cause actual results to differ from projections include, for
example:
- the success or failure of our management's efforts to
implement their business strategy;
- our ability to raise sufficient capital to meet operating
requirements;
- the uncertainty of consumer demand for our product;
- our ability to protect our intellectual property rights;
- our ability to compete with major established companies;
- the effect of changing economic conditions;
- our ability to attract and retain quality employees; and
- other risks which may be described in future filings with the SEC.
We do not promise to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could
affect those statements.
<PAGE> 28
USE OF PROCEEDS
We will not receive any proceeds from the distribution of the Right
Units, but we will receive proceeds from the exercise of the Right Units
or Warrants. However, we can not be assured that any of the Right Units
or Warrants will be exercised. If all of the Right Units are exercised,
we will receive proceeds of $___________. If the $6.00 Warrants are
exercised, we will receive proceeds of $9,961,962. If the $10.00 Warrants
are exercised, we will receive proceeds of $16,603,290.
We intend to utilize any proceeds to develop our web site and for
general corporate purposes, including, advertising our web site, adding
additional products to our web site, and promoting the products sold on
our web site. In addition, 3% of any proceeds raised from the exercise
of the Right Units or Warrants will be paid as a consulting fee. See
"Plan of Distribution - Other" for more information.
DIVIDEND POLICY
Since inception, we have not declared or paid cash dividends on our
common stock. The current policy of the board of directors is to retain
earnings, if any, to provide funds for operating and expansion of our
business. Such policy will be reviewed by the board of directors from
time to time in light of, among other things, our earnings and financial
position.
DETERMINATION OF OFFERING PRICE
There is no market for trading our securities. The exercise price
of the Right Units and Warrants have been arbitrarily determined and do
not bear any relationship to any valuation of the assets, book value, or
prospective earnings of the company.
<PAGE> 29
DILUTION
Set forth below is a description of dilution to purchasers of our
common stock through the exercise of the Right Units (assuming a purchase
price of $4.25 per Right Unit) and the conversion of the preferred stock.
We have assumed no Warrants are exercised. We have not included any
shares which may be purchased pursuant to the consulting agreement
discussed in "Plan of Distribution - Other"
As of May 31, 1999 the net tangible book value of our common stock
was $1,000 or $.00 per share. The "net tangible book value per share"
represents the amount of total tangible assets less total liabilities of
the our company. Without taking into account any changes in net tangible
book value after May 31, 1999, other than to deduct estimated offering
expenses of $50,000, and to give effect to the issuance of:
- 2,490,494 shares of common stock upon the exercise of the
Right Units for net proceeds of $7,056,398;
- 1,660,329 shares of common stock upon the conversion of the
preferred stock; and
- 19,923,946 shares of common stock to Great White in July
1999;
the pro forma book value of our common stock will be $7,007,398 or
$.29 per share. This represents an immediate increase in net tangible
book vale per share of $7,006,398 or $.29 per share to our existing
stockholder and immediate dilution in net tangible book value of $3.96
per share to you. The following table illustrates such dilution:
Offering price per Right Unit $4.25
Net tangible book value per share of outstanding
common stock prior to offering $.00
Increase attributable to new investors $.29
Net tangible book value per share of common
stock after offering $ .29
Per share dilution to new investors $3.96
The following table sets forth the total number of shares of common
stock purchased from the company, the total consideration recorded and
the average price per share for (i) the existing holder of common stock
(Great White) for shares acquired in July 1999 and (ii) the investors
purchasing shares of common stock through the exercise of the Right Units
(assuming conversion of the preferred stock and assuming no exercise of
the Warrants).
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average Price Per Share
Number Percent Amount(1) Percent
<C> <C> <C> <C> <C>
Existing shareholder 19,923,946 82.8% $6,200 .1% $ .00
New shareholder 4,150,823 17.2% $7,057,398 99.9% $1.70
Total 24,074,769 100% $7,063,598 100%
</TABLE>
[FN]
(1) Prior to deduction of expenses.
</FN>
<PAGE> 30
CAPITALIZATION
In July 1999, UBUYJAWS.com issued 19,923,946 shares to Great White,
in exchange for its agreement to fund required start up expenses as
needed. The May 31, 1999 balance sheet shows 1,000,000 shares deemed
previously issued for the $1,000 start up capital previously contributed,
and the 19,923,946 shares replaces this earlier deemed issuance.
The following table sets forth the pro forma capitalization of the
company as of May 31, 1999, as adjusted to reflect the exercise of the
Right Units, and the application of the net proceeds therefrom (includes
issuance of 19,923,946 shares of common stock to Great White in July
1999):
<TABLE>
<CAPTION>
Rights
Pro Forma
Actual As Adjusted
<S> <C> <C>
Long Term Debt $0 $0
Stockholder's Equity:
Common Stock, $0.001 par value per share;
50,000,000 shares authorized; 19,923,946
shares issued and outstanding; 24,074,769
shares, issued and outstanding, respectively,
as adjusted 19,924 24,075
Additional Paid-In Capital (13,724) 6,988,523
Retained Earnings (5,200) (5,200)
Total Stockholders' Equity 1,000 7,007,398
Total Capitalization $1,000 $7,007,398
</TABLE>
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements of the company.
General
We were incorporated in February 1999. We were formed by Great
White which owns 19,923,946 shares of our common stock. We are a
development stage company with a limited operating history. As of May
31, 1999, we had not generated any revenues. There exists limited
historic operations with respect to the operations of the company. The
financial information contained in this prospectus is for the period from
inception (February 10, 1999) to May 31, 1999.
We have a limited operating history on which to base an evaluation
of our business and prospects. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in
new and rapidly evolving markets such as online commerce. We will
encounter various risks in implementing and executing our business
strategy. There can be no assurance that we will be successful in
addressing such risks, and the failure to do so could have a material
adverse effect on our business.
Plan of Operations
Our initial start-up costs were approximately $5,200 as of May 31,
1999, which includes the creation of our web site, advertising, and
professional fees. Great White has funded these initial expenditures.
Based on our current plan of operations it is anticipated that our
monthly operating expenditures for the next 12 months will be
approximately $6,000 per month, which includes salary and benefits for
one employee and overhead. However, based on our rate of growth or if
unexpected expenses are incurred we may need additional funds. Great
White has agreed to fund our operations for the next 12 months up to
$6,000 per month. If we require additional funds or if Great White is
unable to honor its agreement to fund $6,000 per month, we will need to
raise the funds from external sources, and we do not have any commitments
for such funds. We intend to utilize any proceeds from this rights
offering to fund operations.
Any required financing may be raised through additional best
efforts equity offerings, joint ventures or other collaborative
relationships, borrowings, and other sources. To date, we have no
commitment for any such additional financing and there can be no
assurance that any such financing will be available or, if it is
available, that it will be available on acceptable terms.
IMPACT OF YEAR 2000
The year 2000 poses certain issues for business and consumer
computing, particularly the functionality of software for two-digit
storage of dates and special meanings for certain dates such as 9/9/99.
The year 2000 is also a leap year, which may also lead to incorrect
calculations, functions, or system failure. The problem exists for many
kinds of software, including software for mainframes, PCs, and embedded
systems.
<PAGE> 32
In assessing the effect of the Year 2000 Problem, our management
determined that there existed two general areas that needed to be
evaluated:
- Internal infrastructure and
- Supplier/third-party relationships.
A discussion of the various activities related to assessment and
actions resulting from those evaluations is set forth below.
Internal Infrastructure.
We are in the process of verifying that all of our personal
computers, servers, and software are Year 2000 compliant. We are in the
process of replacing or upgrading all items that have been found not to
be Year 2000 compliant. We intend to determine if the software vendors
of all of our critical applications have represented that their products
are Year 2000 compliant. The costs related to these efforts are not
expected to be material to our business.
Suppliers/Third-Party Relationships.
As mentioned above, we will be gathering information from vendor
web sites and available compliance statements to identify and, to the
extent possible, resolve issues involving the Year 2000 Problem. We rely
on outside vendors for water, electrical, and telecommunications services
as well as climate control, building access, and other infrastructure
services. We do not intend to independently evaluate the Year 2000
compliance of the systems utilized to supply these services. We have
received no assurance of compliance from the providers of these services.
There can be no assurance that these suppliers will resolve any or all
Year 2000 Problems with these systems before the occurrence of a material
disruption to our business. Any failure of these third-parties to
resolve Year 2000 problems with their systems in a timely manner could
have a material adverse effect on our business.
Contingency Plans.
We have not currently developed a formal contingency plan to be
implemented as part of our efforts to identify and correct Year 2000
Problems affecting our internal systems. However, if we deem necessary,
we may take the following actions:
- Accelerated replacement of affected equipment or software;
- Short to medium-term use of backup equipment and software;
- Increased work hours for our personnel;
- Other similar approaches.
If we are required to implement any of these contingency plans,
such plans could have a material adverse effect on our business.
Based on the actions taken to date as discussed above, we are
reasonably certain that we have or will identify and resolve all Year
2000 Problems that could materially adversely affect our business and
operations.
<PAGE> 33
BUSINESS
General
UBUYJAWS.com, Inc. is a Texas corporation, incorporated in February
1999, which markets and sells marine watercraft, recreational vehicles,
and related products via the Internet on its web site located at
www.UBUYJAWS.com. Our product lines includes brand names such as
Mercury, Polaris, Viking Sport Cruisers, and Cruiser Yachts. Currently,
we primarily sell products distributed by our parent company, Great White
Marine & Recreation, Inc. However, based on our success, we intend to
expand our product line in the future. In addition, we are developing a
web site at www.GreatYachts.com where high dollar watercraft such as
yachts will be sold by UBUYJAWS.com through our brokerage listings.
Information About Great White Marine & Recreation, Inc.
Great White is an international distributor of marine watercraft,
recreational vehicles, and related products. Great White sells its
products by means of its network of dealers extending from the
southwestern United States through Mexico, Central America, South
America, and the Caribbean. Great White is currently traded on the OTC
Electronic Bulletin Board under the symbol "JAWS" and has 19,923,946
shares of common stock outstanding as of July 6, 1999.
Products and Services
We sell the following products on our web site www.UBUYJAWS.com:
Polaris(TM)
Personal Watercraft
We sell a variety of one, two, three, and four person personal
watercraft ("PWC") and related products made by Polaris Industries, Inc.
("Polaris"). PWC are sit-down versions of water scooter vehicles
designed for use on lakes, rivers, oceans, and bays. PWC are used
primarily for recreational purposes and are designed for one, two, three,
or four passengers. Polaris' PWCs range in power from 95hp to 140hp
Polaris entered the PWC market in 1992. After many years of rapid
growth, Polaris estimates that worldwide sales for PWC declined during
1997 to approximately 200,000 units. Other major PWC manufacturers are
Bombardier, Yamaha, Kawasaki, and Arctic Cat. Polaris' line of PWCs
consists of five models, including touring, performance, and racing.
All Terrain Vehicles
We sell a wide variety of Polaris' recreational and utility all-
terrain vehicles ("ATVs") and related products, including helmets, boots,
gloves, clothing, and accessories. ATVs are four-wheel vehicles with
balloon style tires designed for off-road use and traversing rough
terrain, swamps, and marshland. ATVs are used for recreation, in such
sports as fishing, hunting, and racing, as well as for utility purposes
on farms, ranches, and construction sites. ATVs were introduced to the
North American market in 1971 by Honda. Other Japanese motorcycle
manufacturers, Yamaha, Kawasaki, and Suzuki, entered the North American
market in the late 1970s and early 1980s.
Polaris entered the ATV market in the spring of 1985 with both a
three-wheel and a four-wheel product. Polaris currently produces four-
wheel ATVs, which provide more stability for the rider than the earlier
three-wheel versions. Polaris' line of ATVs consisting of thirteen
models, includes general purpose, sport and four-wheel drive utility
models. In addition, Polaris has a six-wheel off-road utility vehicle
and a six-wheel drive off-road Polaris Ranger side-by-side utility and
recreational vehicle. Polaris' ATV features the totally automatic
Polaris variable transmission which requires no manual shifting and a
MacPherson strut front suspension, which enhances control and stability.
The Polaris ATVs range in power from 244cc to 499cc. Polaris' ATVs
include both two-cycle and four-cycle engines and both shaft and chain
drive. In 1997, Polaris introduced the Concentric Drive System which
combines advanced rear chain drive with front shaft drive which Polaris
believes will deliver improved performance and handling with excellent
long-term durability.
<PAGE> 34
Great White's current distribution agreement with Polaris for
distribution of both PWCs and ATVs expires on July 31, 1999, subject to
extension by mutual agreement. There is no assurance that Great White
will be able to extend such agreement on economically favorable terms, if
at all.
Cruisers(TM) Yachts
We sell built-to-order Cruisers Yachts ranging in size from 28 feet
to 50 feet in length in Mexico. Cruisers Yachts are a division of KCS
International, Inc. Management believes that in recent years Cruisers
Yachts have made gains in both market share and brand recognition. Great
White's current distribution agreement expires on May 5, 2001. Great
White has made the following purchase commitments with respect to
Cruisers Yachts: (a) $1,000,000 for the twelve month period ending May
1999, (b) $1,500,000 for the twelve month period ending May 2000, and (c)
$2,000,000 for the twelve month period ending May 2001. Great White's
failure to meet the above commitments is grounds for termination of its
distribution agreement. Upon expiration of its current distribution
agreement, there is no assurance that Great White will be able to extend
such agreement on economically favorable terms, if at all.
Mercury(TM) Outboard Motors
We sell the entire line of Mercury outboard boat motors, engine
lubricants, parts, and accessories in Mexico. In 1996 and 1997, Mercury
introduced four OptiMax-Registered Trademark-outboard engines ranging
from 135-horsepower to 250-horsepower and featuring Mercury's new direct
fuel injection ("DFI") technology. DFI is part of Mercury's plan to
reduce engine emissions by 75% by 2006 to comply with Environmental
Protection Agency requirements. Mercury's line of low-emission engines
also includes four-cycle versions of its smaller two-cycle outboards,
and, according to Mercury, these four-cycle outboards require no
modification to meet reduced emission levels. We also sell Mercury's
QuickSilver (TM) Two-Cycle Engine Oil. This product is refined in
Monterrey, Mexico by Pemex.
Great White's current distribution agreement with Mercury expired
on April 16, 1999, subject to extension by mutual agreement. Great White
is currently in the process of extending this agreement. There is no
assurance that Great White will be able to extend such agreement on
economically favorable terms, if at all.
<PAGE> 35
Viking Sport Cruisers (TM)
We sell Viking Sport Cruisers ranging in size from 36 feet to 82
feet in length. Great White's current distribution agreement expires on
July 31, 2000. Upon expiration of its current distribution agreement,
there is no assurance that Great White will be able to extend such
agreement on economically favorable terms, if at all.
GreatYachts.com
In addition to the sale of the above products, we intend to create
an additional web site primarily for the sale of yachts. The web site
will list yachts owned by Great White, as well as by other distributors.
The web site will feature color photographs and detailed specifications
with respect to each yacht listed. If customers want additional
information or are interested in purchasing any of the yachts, the
customer will call a contact number provided on the web site. All sales
will be made via telephone.
Distribution
Customers or dealers will be able to directly purchase smaller
dollar items via the use of an "electronic" shopping cart. Customers can
chose the items they wish to purchase, and then can pay for the items
with a credit card or via wire transfer. We estimate that these items
will be shipped to the customer within two weeks of purchase. For larger
dollar items, customers or dealers will be given a contact person with
whom they can make their order. Shipping times will vary based on the
purchase and will be discussed with the customer at the time of sale.
Sales and Marketing
We plan to conduct a marketing program that is aimed at attracting
and retaining customers who use our web site for adverting, e-commerce,
and other commercial activities. We plan to use on-line and traditional
media, such as newspapers and billboards, in conducting these programs.
We will be utilizing the services of Great White's advertising
agency Premier Maldonado & Associates, Inc. ("PM&A"). As a great portion
of Great White's operations are conducted in Mexico, it has hired PM&A,
which is primarily focused on advertising for the Hispanic market.
Although UBUYJAWS.com will market to a broader market, to date we have
not developed any relationships with any other sales agency. We intend
to advertise in trade magazines, as well as on cable television on
outdoor shows geared toward our products. Our ability to conduct any
advertising, as well as the level to which we will be able to conduct any
advertising will be dependent on the availability of the funds provided
to us initially by Great White, and in the future, on funds we are able
to generate through operations. In addition, to date we have not hired
any other sales agency and will be dependent on our present personnel for
marketing. We can provide no assurance that we will be able to implement
a successful marketing plan, or that we will have the financial
capability to adequately do so.
<PAGE> 36
Competition
The market for Internet e-commerce opportunities and other
commercial uses of the Internet are new and rapidly evolving, and
competition is expected to increase significantly in these markets, as
barriers to entry are relatively insubstantial.
We believe that our ability to compete depends on many factors both
within and beyond our control, including the following:
- the timing and market acceptance of the our business model;
- the effectiveness of our web site in attracting potential
customers for our products;
- the number and types of strategic relationships we enter into
(including e-commerce partnerships); and
- our marketing efforts.
At this time, we are not aware of any other web sites offering the
variety of marine and recreational products offered by UBUYJAWS.com.
However, it should be expected that in the future we will compete with
additional companies, many of which may have greater financial resources
than our company. We can provide no assurance that we will be able to
successfully compete in this market.
Employees
At July 8, 1999, we operated with the services of our directors,
executive officers, and one full-time employee. All other employees
which may devote any time to our company are employed and compensated by
Great White.
Facilities
We operate out of a facility located at 208 Otis Drive, in Waco,
Texas, which consists of a 10,000 square foot office building with an
attached warehouse. The facility is owned by Great White, and our
proportionate rent of approximately $3,000 is a capital contribution by
Great White. There is no assurance that in the future we will not be
forced to pay rent or purchase a separate facility.
Insurance
We have insurance covering risks incurred in the ordinary course of
business, including general liability, special and business property
coverage and business interruption insurance. We do not maintain key-man
term life insurance on any directors or executive officers. We believe
our insurance coverage is adequate.
<PAGE> 37
Intellectual Property
We have not received a trademark on "UBUYJAWS.com." We are
permitted to selectively utilize our product manufacturers' trademarks to
promote such products, subject to the terms of Great White's distribution
agreements. We are dependent on such product manufacturers to retain
their individual trademarks and to allow us to utilize such trademarks.
Government Regulation and Legal Uncertainties
There is an increasing number of laws and regulations pertaining to
the Internet. In addition, a number of legislative and regulatory
proposals are under consideration by federal, state, local and foreign
governments and agencies. Laws or regulations may be adopted with
respect to the Internet relating to liability for information retrieved
from or transmitted over the Internet, online content regulation, user
privacy, taxation and quality of products and services. Any new
legislation or regulation, or the application or interpretation of
existing laws, may decrease the growth in the use of the Internet, which
could in turn decrease the demand for our service, increase our cost of
doing business or otherwise have a material adverse effect on our
business, results of operations, and financial condition.
Internet Taxation. A number of legislative proposals have been
made at the federal, state, and local level, and by certain foreign
governments, that would impose additional taxes on the sale of goods and
services over the Internet and certain states have taken measures to tax
Internet-related activities. Any legislation or other attempts at
regulating commerce over the Internet, may substantially impede the
growth of commerce on the Internet and, as a result, adversely affect our
opportunity to derive financial benefit from those activities.
Jurisdictions. It is possible that, although our transmissions
over the Internet originate primarily in Texas, the governments of other
states and foreign countries might attempt to regulate our transmissions
or prosecute us for violations of their laws. These laws may be
modified, or new laws enacted, in the future. Any of the foregoing
developments could have a material adverse effect on our business. In
addition, as our service is available over the Internet in multiple
states and foreign countries, these jurisdictions may claim that we are
required to qualify to do business as a foreign corporation in each of
these states or foreign countries. Any new legislation or regulation,
the application of laws and regulations from jurisdictions whose laws do
not currently apply to our business, or the application of existing laws
and regulations to the Internet and other online services could have a
material adverse effect on our business.
Legal Proceedings
Since the date of its organization through the date of this
prospectus, we have not been involved in any legal proceedings. Great
White is presently a party to an enforcement proceeding with the SEC.
Great White believes that it has complied with all information requests
from the SEC and has met with the SEC in an attempt to resolve the issues
raised in the inquiry. As the inquiry is ongoing, it is difficult to
ascertain the length of any such investigation, the cost to Great White,
or what action, if any, will be taken by the SEC against Great White or
its officers, some of which are officers of UBUYJAWS.com. There can be
no assurance, however, that we will not in the future be involved in
litigation incidental to the conduct of our business.
<PAGE> 38
MANAGEMENT
Directors and Executive Officers
The following table sets forth the directors and officers of the
company and their respective ages and positions:
<TABLE>
<CAPTION>
Name Age Position
<C> <C> <C>
Christopher C. Smith 26 Chairman of the Board and President
William Edward Harvey II 40 Vice President and
Chief Information Officer
Felicia Ursrey 35 Director, Secretary, and, Treasurer
</TABLE>
Christopher C. Smith has served as chairman and president of the
company since inception. Mr. Smith has over two years of experience in
the boat and marine related industry. Mr. Smith has served as Vice
President of sales for Great White since October 1997 and prior to that
he was for a period of two years a Sales Manager at McComb Diesel,
located in McComb, Mississippi. McComb Diesel is a distributor of Western
Star Trucks and other road equipment manufacturers. Mr. Smith received
his BA degree in Marketing from Mississippi State University in 1995.
William Harvey has served as Vice President and Chief Information
Office of the company since June 1999. Mr. Harvey joined the board of
Great White in March 1999. Since February 1999, Mr. Harvey
has been the President of Rhino Computing. From December 1997 until
retirement in March 1998, Mr. Harvey served as a Major in the United
States Air Force as a flight instructor of fighter pilots. From April
1994 until November 1997, Mr. Harvey served as the Chief of Integration
and Testing for the Warrior Preparation Center, a joint United States Air
Force and United States Army computer war gaming facility in Europe.
Felicia Ursrey has served as director, secretary, and treasurer of
the company since inception. Since April 1998, Ms. Ursrey has served as
office manager for Great White. From May 1988 until March 1997, Ms.
Ursrey served as a terminal manager for GTI, a trucking company in
Mississippi.
Pursuant to the our bylaws, the board of directors are chosen by
the stockholders annually, at the annual meeting of the company. Each
director will hold office for one year. All executive officers of the
company are chosen by the board of directors and serve at the board's
discretion. There are family relationships among the company's officers,
directors or employees. Mr. Smith and Ms. Ursrey are brother and sister.
The company also plans to reimburse directors for any expenses incurred
in attending board of directors and board committee meetings.
<PAGE> 39
EXECUTIVE COMPENSATION
We have only recently incorporated and have not paid any
compensation to any person, and presently have no employment agreements
with our officers or other key employees. The compensation of our
executives who are also employed by Great White will be paid by Great
White.
We have no options or warrants outstanding, and we do not currently
have a stock option plan or defined benefit plan. We do not have any
present plans to issue and options or warrants to any directors or
employees.
CERTAIN TRANSACTIONS
In July 1999, we entered into an agreement with Great White whereby
we agreed to issue Great White 19,923,946 shares of our common stock in
exchange for Great White agreeing: (i) to fund our operations at a rate
of $6,000 per month, (ii) to make us the exclusive Internet dealer for
its products for a period of one year, and (ii) to grant us the right to
extend our agreement to be their exclusive Internet dealer for an
additional year if we had a positive net worth.
PRINCIPAL STOCKHOLDERS
The table below sets forth the beneficial ownership of common stock
of the company by directors, the named executive officer, holders of five
percent or more of the company, and the officers and directors as a
group.
<TABLE>
<CAPTION>
Percentage of
Ownership
Number of Shares of Number of Shares of
Common Stock Common Stock
Name and Address Beneficially Owned Beneficially Owned Before
After
Of Beneficial Owners(1) Prior to the Dividend After Dividend Dividend
Dividend(2)
<S> <C> <C> <C> <C>
Great White Marine
& Recreation, Inc. 19,923,946 19,923,946 100% 72.7%(3)
Christopher C. Smith -- -- -- --
William Edward Harvey II -- 59,625(2) -- *(3)
Felicia Ursrey -- 172,500(2) -- *(3)
All officers and directors
as a group (3 persons) -- 232,125(2) -- *(3)
</TABLE>
[FN]
__________
* Denotes less than 1%.
(1) The business address of each individual and of Great White is the
same as the address of the company's principal executive offices.
(2) Assumes all Right Units are exercised and then all Warrants are
(3) exercised and the preferred stock is converted.
(4) Does not include any shares which may be purchased pursuant to the
(5) consulting agreement discussed in "Plan of Distribution - Other"
</FN>
<PAGE> 40
DESCRIPTION OF SECURITIES
Right Units
We are issuing 1,660,329 Right Units to Great White common stock
holders of record as of _______, 1999 based on the ratio of one Right
Unit for every 12 shares of Great White common stock owned. Each Right
Unit consists of one and one-half shares of common stock, one share of
convertible preferred stock, one $6.00 Warrant, and one $10.00 Warrant.
General. The following is a brief summary of certain provisions of
the Right Units.
Exercise Price and Terms. Each Right Unit entitles you to purchase
for $___ per Right Unit, at any time over a 45 day period commencing on
the effective date of the registration statement of which this prospectus
is a part, one and one-half share of common stock, one share of preferred
stock, a $6.00 Warrant, and a $10.00 Warrant.
In order to exercise the Right Unit, you must surrender the Right
Unit certificate evidencing the Right Unit, complete, execute, and
deliver to American Registrar & Transfer Company the exercise form on the
Right Unit certificate, together with payment to us of the exercise price
with respect to the Right Units then being exercised. Payment of the
exercise price and other amounts may be made in cash, or by certified or
official bank check to the order of UBUYJAWS.com, Inc. No adjustment
will be made for any cash dividends, whether paid or declared, on any
securities issuable upon exercise of a Right Unit. If you exercise fewer
than all of the Right Units evidenced by the Right Unit certificate, we
will deliver to the registered holder a new Right Unit certificate
evidencing the number of Right Units not exercised.
Common Stock
We are authorized to issue up to 50,000,000 shares of common stock.
As of July 12, 1999, there were 19,923,946 shares of common stock issued
and outstanding. The holders of shares of our common stock are entitled
to one vote per share on each matter submitted to a vote of stockholders.
In the event of liquidation, holders of common stock are entitled to
share ratably in the distribution of assets remaining after payment of
liabilities, if any. Holders of common stock have no cumulative voting
rights, and, accordingly, the holders of a majority of the outstanding
shares have the ability to elect all of the directors. Holders of common
stock have no preemptive or other rights to subscribe for shares.
Holders of common stock are entitled to such dividends as may be declared
by the board of directors out of funds legally available therefor. The
outstanding common stock is, and the common stock to be outstanding upon
completion of this offering will be, validly issued, fully paid and non-
assessable.
<PAGE> 40
Preferred Stock
We are authorized to issue up to 5,000,000 shares of preferred
stock, of which none are issued or outstanding.
The Series A Convertible Preferred Stock will be our only
authorized series of preferred stock. The holders of Series A
Convertible Preferred Stock will be entitled to receive cumulative
preferential dividends of _____ %. Dividends may be paid in cash or in
kind by issuing a number of additional shares of common stock valued at
the fair market vale of the common stock on the date of the dividend as
determined by our board of directors. Holders of the ___% preferred
stock have no voting rights other than approval rights with respect to
the issuance of parity or senior securities.
Conversion. The Series A Preferred Stock is convertible into our
common stock at a one-to-one ratio.
Redemption Provisions. We have the option to redeem the
outstanding Series A Preferred Stock in whole at any time or in part from
time to time, on not less than 30 days' written notice to you at a price
equal to $0.01 per share of Series A Preferred Stock so long as the
closing price for the common stock exceeds: (1) $15 per share for 20
consecutive trading days prior to the day on which we give notice of
redemption. You will have the right to convert the Series A Preferred
Stock under the terms described above until the redemption date. On the
redemption date, if you are the registered holder of Series A Preferred
Stock, you are entitled to payment of the redemption price upon surrender
of the Series A Preferred Stock to us. If we redeem fewer than all of
the outstanding shares of Series A Preferred Stock, we will designate
those Series A Preferred Stock to be redeemed pro rata or by lot.
Voting Rights: Except as required by law, the Series A Preferred
Stock will vote together with the common stock as a single class with the
right to that number of votes equal to the number of shares of common
stock issuable upon conversion of the Series A Preferred Stock at the
time the record for the vote is taken.
Anti-Dilution Adjustments. If we engage in a stock split or
reverse stock split, or reclassify the common stock, the number of shares
of common stock to be received upon conversion of the Series A Preferred
Stock will be adjusted so that you will be entitled to receive the same
number of securities that you would have been entitled to receive if the
Series A Preferred Stock had been exercised before the stock split or
reverse stock split, or reclassification.
<PAGE> 41
Warrants
General. The following is a brief summary of certain provisions of
the Warrants included in the Right Units offered. This summary does not
purport to be complete and is qualified in all respects by reference to
the actual terms and provisions of the Warrant Agreement. A copy of the
agreement is filed as an exhibit to the registration statement of which
this prospectus is a part.
Exercise Price and Terms. Each $6.00 and $10.00 Warrant entitles
you to purchase at any time over a five-year period commencing on the
effective date of the registration statement of which this prospectus is
a part, one share of common stock at exercise prices of $6.00 and $10.00
respectively, subject to adjustment in accordance with the anti-dilution
and other provisions referred to below. The exercise prices of the
Warrants bears no relation to any objective criteria of value, and should
in no event be regarded as an indication of any future market price of
the securities offered. You have the right to exercise your Warrants for
the purchase of shares of common stock only if a current prospectus
relating to such shares is then in effect and only if such shares are
qualified for sale, or deemed to be exempt from qualification, under
applicable state securities laws. We will use our best efforts to
maintain a current prospectus relating to such shares of common stock at
all times when the market price of the common stock exceeds the exercise
price of the Warrants until the expiration date of the Warrants although
there can be no assurance that we will be able to do so.
In order to exercise the Warrants, you must surrender the Warrant
certificate evidencing the Warrants, complete, execute, and deliver the
exercise form on the Warrant certificate, together with payment to us of
the exercise price with respect to the Warrants then being exercised.
Payment of the exercise price and other amounts may be made in cash, or by
certified or official bank check to the order of UBUYJAWS.com, Inc. No
adjustment will be made for any cash dividends, whether paid or declared,
on any securities issuable upon exercise of a Warrant.
Anti-Dilution Adjustments. If we issue a stock dividend, engage in
a stock split or reverse stock split, or reclassify the common stock, the
number of shares of common stock purchasable upon exercise of the Warrant
will be adjusted so that you will be entitled to receive the same number
of securities that you would have been entitled to receive if the Warrant
had been exercised before the stock dividend, stock split or reverse
stock split, or reclassification. No adjustment will be made however,
unless the adjustment would result in a $0.05 change in the exercise
price of the Warrant. If an adjustment is made, the exercise price of
the Warrant will be adjusted so that the total price for exercising the
Warrant will be the same after the adjustment as it was before the
adjustment.
Redemption Provisions. We have the option to redeem the
outstanding Warrants in whole at any time or in part from time to time,
on not less than 30 days' written notice to you at a price equal to $0.01
per Warrant so long as the closing price for the common stock exceeds:
(1) $10.00 per share for the $6.00 Warrants, and (2) $15.00 per share for
the $10.00 Warrants, for 20 consecutive trading days prior to the day on
which we give notice of redemption. You will have the right to exercise
the Warrants under the terms described above until the redemption date.
On the redemption date, if you are the registered holder of unexercised
Warrants, you are entitled to payment of the redemption price upon
surrender of the redeemed Warrants to us. If we redeem fewer than all of
the outstanding Warrants, we will designate those Warrants to be redeemed
pro rata or by lot.
<PAGE> 42
Texas Takeover Statute.
Upon completion of this offering, we will be subject to Part
Thirteen of the Texas Business Corporation Act ("Part Thirteen"), which
became effective on September 1, 1997. Subject to certain exceptions,
Part Thirteen prohibits a Texas corporation which is an issuing public
corporation from engaging in any business combination with any affiliated
shareholder for a period of three years following the date that such
shareholder became an affiliated shareholder, unless:
- - Prior to such date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the shareholder becoming an affiliated shareholder; or
- - The business combination is approved by at least two-thirds of the
outstanding voting shares that are not beneficially owned by the
affiliated shareholder or an affiliate or associate of the
affiliated shareholder at a meeting of shareholders called not less
than six months after the affiliated shareholder's share
acquisition date.
In general, Part Thirteen defines an affiliated shareholder as any
entity or person beneficially owning 20% or more of the outstanding
voting stock of the issuing public corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.
Part Thirteen defines a business combination to include, among other
similar types of transactions, any merger, share exchange, or conversion
of an issuing public corporation involving an affiliated shareholder.
Part Thirteen may have the effect of inhibiting a non-negotiated
merger or other business combination that we may be involved in.
Transfer Agent
American Registrar & Transfer Company serves as the transfer agent
for our securities.
<PAGE> 42
SHARES AVAILABLE FOR FUTURE SALE
Upon the date of this prospectus, there are 19,923,946 shares of
common stock issued to Great White in July 1999, comprising all of the
issued and outstanding shares of common stock. The shares of common
stock will be subject to the resale provisions of Rule 144. Upon the
effectiveness of this registration statement, 7,471,481 shares of common
stock issuable upon exercise of the Right Units and Warrants and the
conversion of the preferred stock will be eligible for immediate resale
in the public market if and when any market for the common stock
develops. Sales of shares of common stock in the public markets may
have an adverse effect on prevailing market prices for the common stock.
Rule 144 governs resale of "restricted securities" for the account
of any person (other than an issuer), and restricted and unrestricted
securities for the account of an "affiliate" of the issuer. Restricted
securities generally include any securities acquired directly or
indirectly from an issuer or its affiliates which were not issued or sold
in connection with a public offering registered under the Securities Act.
An affiliate of the issuer is any person who directly or indirectly
controls, is controlled by, or is under common control with, the issuer.
Affiliates of the company may include its directors, executive officers,
and persons directly or indirectly owning 10% or more of the outstanding
common stock. Under Rule 144 unregistered resales of restricted common
stock cannot be made until it has been held for one year from the later
of its acquisition from the company or an affiliate of the company.
Thereafter, shares of common stock may be resold without registration
subject to Rule 144's volume limitation, aggregation, broker transaction,
notice filing requirements, and requirements concerning publicly
available information about the company ("Applicable Requirements").
Resales by the company's affiliates of restricted and unrestricted common
stock are subject to the Applicable Requirements. The volume limitations
provide that a person (or persons who must aggregate their sales) cannot,
within any three-month period, sell more than the greater of one percent
of the then outstanding shares, or the average weekly reported trading
volume during the four calendar weeks preceding each such sale. A non-
affiliate may resell restricted common stock which has been held for two
years free of the Applicable Requirements.
<PAGE> 43
PLAN OF DISTRIBUTION
Introduction
Great White's board of directors has declared a stock dividend, and
has authorized the distribution of the Right Units subject to the
effectiveness of the registration statement covering the securities
distributed as part of the Right Units. The terms of the distribution
were arbitrarily determined and bear no relation to assets or any other
criteria. It is expected that we will expend a total of approximately
$50,000 for legal fees, printing, organization costs and other costs
involved in the distribution of the Right Units to the Great White
stockholders.
Method of Distribution and Subsequent Trading
No underwriters are involved or are expected to be involved in the
distribution of the Right Units. The Right Units are being distributed
by Great White as a dividend in exchange for no consideration.
Certificates representing the Right Units will be distributed on
____________, 1999 or as soon thereafter as practicable to holders of
Great White common stock of record on _____________, 1999. The dividend
will be distributed on the basis of one Right Unit for each 12 shares of
issued and outstanding Great White common stock. It is anticipated that
Certificates representing fractional Right Units will not be issued. No
exchange of shares, payment, or other action by holders of Great White
common stock will be required (not including any payments from the
exercise of the Right Units or Warrants).
A copy of this prospectus is being mailed to each Great White
holder of record on __________, 1999 together with certificates
representing the Right Units. Copies of this prospectus are also being
mailed to brokers and dealers who are known to trade or make a market in
Great White common stock. However, we do not anticipate that an active
market for our common stock will develop within the foreseeable future,
and there can be no assurance that any trading market will develop at any
time.
Other
Great White has entered into an agreement with respect to the
preparation of this offering with a consultant, which requires the
following compensation: (i) payment of 3% of the proceeds raised from the
exercise of any of the Right Units issued in this offering and any of the
Warrants exercised, (ii) 398,479 shares of common stock of UBUYJAWS.com
at a purchase price equal to the book value of the shares at the time of
incorporation, and (iii) a five-year warrant to purchase 597,718 shares
of Great White common stock at an exercise price of $1.50 per share.
<PAGE> 44
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that
in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of
the small business issuer in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Currently, there is no public trading market for our securities and
there can be no assurance that any market will develop. If a market
develops for our securities, it will likely be limited, sporadic and
highly volatile.
EXPERTS
The financial statements of UBUYJAWS.com, Inc. at May 31, 1999,
appearing in this SB-2 Registration Statement have been audited by Malone
& Bailey, PLLC, independent auditors, as set forth in their report
thereon appearing elsewhere herein and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters with respect to the issuance of shares of
common stock offered hereby will be passed upon for the company by Brewer
& Pritchard, P.C., Houston, Texas.
<PAGE> 45
WHERE YOU CAN FIND MORE INFORMATION
At your request, we will provide you, without charge, a copy of any
information incorporated by reference in this prospectus. If you want
more information, write or call us at:
UBUYJAWS.com, Inc.
208 Otis Drive
Waco, Texas 76712
Telephone: (254) 776-3999
Our fiscal year ends on December 31. We intend to furnish our
shareholders annual reports containing audited financial statements and
other appropriate reports. In addition, we intend to become a reporting
company and file annual, quarterly and current reports, or other
information with the SEC. You may read and copy any reports, statements,
or other information we file at the SEC's public reference room in
Washington, D.C. You can request copies of these documents, upon payment
of a duplicating fee by writing to the SEC. Please call the SEC at 1-
800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the
SEC Internet site at http://www.sec.gov.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Texas law authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders
for monetary damages for breach of directors' fiduciary duty of care.
The amended and restated articles of incorporation of the company limit
the liability of directors of the company (in their capacity as directors
but not in their capacity as officers) to the company or its stockholders
to the fullest extent permitted by Texas law. Specifically, directors of
the company will not be personally liable for monetary damages for breach
of a director's fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the company or its
stockholders, (ii) for acts or omissions not in good faith that
constitute a breach of duty of the director to the company or an act or
omission which involves intentional misconduct or a knowing violation of
law, (iii) for an act or omission for which the liability of a director
is expressly provided by an applicable statute, or (iv) for any
transaction from which the director received an improper personal
benefit, whether the benefit resulted from an action taken within the
scope of the director's office. Section 2.41 of the Texas Business
Corporation Act relates to directors' liability for unlawful dividends
and stock issuances.
The inclusion of this provision in the amended and restated
articles of incorporation may have the effect of reducing the likelihood
of derivative litigation against directors, and may discourage or deter
stockholders or management from bringing a lawsuit against directors for
breach of their duty of care, even though such an action, if successful,
might otherwise have benefited the company and its stockholders.
The company's amended articles of incorporation provide for the
indemnification of its executive officers and directors, and the
advancement to them of e. The amended and restated articles of
incorporation include related provisions meant to facilitate the
indemnities' receipt of such benefits. These provisions cover, among
other things: (i) specification of the method of determining entitlement
to indemnification and the selection of independent counsel that will in
some cases make such determination, (ii) specification of certain time
periods by which certain payments or determinations must be made and
actions must be taken, and (iii) the establishment of certain
presumptions in favor of an indemnitee. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers or persons controlling the company pursuant to the
foregoing provisions, the company has been informed that, in the opinion
of the SEC, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
<PAGE> 46
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be
incurred in connection with the distribution of the securities being
registered. The expenses shall be paid by the Registrant.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 9,694
Printing and Engraving Expenses *
Legal Fees and Expenses *
Accounting Fees and Expenses *
Miscellaneous *
TOTAL $ *
* To be provided by amendment.
Item 26. Recent Sales of Unregistered Securities
In July 1999, the company issued 19,923,946 shares of common stock
to Great White. The company believes this transaction is exempt from
registration pursuant to Section 4(2) of the Securities Act.
Item 27. Exhibits
<PAGE> 47
INDEX TO EXHIBITS
Exhibit No. Identification of Exhibit
3.1(1) Articles of Incorporation
3.2(1) Articles of Amendment to the Articles of Incorporation
3.3(1) By-Laws
3.4(3) Preferred Stock Designation
4.1(1) Form of Specimen of common stock
4.2(3) Form of Right Unit
4.3(3) Form of Warrant Agreement
4.4(3) Subscription Certificate
5.1(3) Legal Opinion
8.1(1) Tax Opinion
23.1(1) Consent of Malone & Bailey, PLLC
23.2(2) Consent of Brewer & Pritchard , P.C.
27.1(1) Financial Data Schedule
___________________
<FN>
(1) Filed herewith.
(2) Contained in Exhibit 5.1.
(3) To be filed by amendment.
</FN>
<PAGE> 48
Item 28. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
i. To include any prospectus required by Section 10(a)(3)
of the Securities Act;
ii. Reflect in the prospectus any facts or events arising
after the effective date of which, individually or together,
represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the SEC pursuant to Rule
424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement; and
<PAGE> 49
iii. Include any additional or changed material on the plan
of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) i. That, for the purpose of determining liability
under the Securities Act, the information omitted from the
form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4), or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the
time it was declared effective.
ii. For determining any liability under the Securities Act,
each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waco, State of Texas, on the 14th day of July,
1999.
UBUYJAWS.COM, INC.
By:/s/ Christopher C. Smith
CHRISTOPHER C. SMITH, President and Chief
Executive Officer
This registration statement has been signed by the following persons
in the capacities and on the dates indicated:
Signature Title Date
/s/ Christopher C. Smith Chairman of the Board, July 14, 1999
CHRISTOPHER C. SMITH Chief Executive Officer,
and President
/s/ William E. Harvey Director, Vice President, July 14, 1999
WILLIAM E. HARVEY and Chief Information Officer
/s/ Felicia Ursrey Director, Secretary, and July 14, 1999
FELICIA URSREY Treasurer
<PAGE> 51
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Stockholders
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
Waco, Texas
We have audited the accompanying balance sheet of UBUYJAWS.com, Inc. as
of May 31, 1999, and the related statements of accumulated deficit,
stockholders equity, and cash flows for the period from February 10, 1999
(date of inception) through May 31, 1999. These financial statements are
the responsibility of management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of UBUYJAWS.com,
Inc. as of May 31, 1999, and the results of their operations and their
cash flows for the period ending May 31, 1999, in conformity with
generally accepted accounting principles.
Malone & Bailey, PLLC
Houston, Texas
June 18, 1999
<PAGE> 52
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Balance Sheet
May 31, 1999
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash $1,000
Receivable from parent company 5,200
Total Assets $6,200
Liabilities $5,200
Stockholder's Equity
Preferred stock, $.001 par, 5,000,000
shares authorized, no shares issued
or outstanding -
Common stock, $.001 par, 50,000,000
shares authorized, 1,000,000 shares
issued and outstanding 1,000
Paid in capital 5,200
Deficit accumulated during the
development stage (5,200)
Total Stockholder's Equity 1,000
Total Liabilities & Stockholder's Equity $6,200
</TABLE>
See Summary of Accounting Policies and
Notes to Financial Statements
<PAGE> 53
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Statement of Accumulated Deficit
For the Period from February 10, 1999
(Date of Inception) Through May 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Administrative expense $5,200
Net deficit accumulated during the
Development Stage $5,200
</TABLE>
See Summary of Accounting Policies and
Notes to Financial Statements
<PAGE> 54
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Statement of Changes in Stockholder's Equity
For the Period from February 10, 1999
(Date of Inception) Through May 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Issuance of 1,000,000 shares at inception
to Parent Company for cash $ 1,000
Agreement to contribute overhead costs by
parent company for initial operating costs 5,200
Less: accumulated deficit incurred during
the development stage (5,200)
Total Stockholder's Equity $ 1,000
</TABLE>
See Summary of Accounting Policies and
Notes to Financial Statements
<PAGE> 55
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Statement of Cash Flows
For the Period from February 10, 1999
(Date of Inception) Through May 31, 1999
Cash flows from operating activities:
Accumulated deficit $(5,200)
Increase in accounts payable 5,200
Net cash flows from operating activities 0
Cash flows from financing activities
Proceeds from initial stock issued to
parent company 1,000
Cash at end of period $1,000
See Summary of Accounting Policies and
Notes to Financial Statements
<PAGE> 56
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - Summary of Significant Accounting Policies
Business. UBUYJAWS.com, Inc. ("Company") is a Texas Corporation formed February
10, 1999 as a wholly-owned subsidiary of Great White Marine & Recreation, Inc.
("Parent"), a Nevada corporation. The Company was originally incorporated as
GreatWhite.com, Inc. The name was changed to the current name on May 26, 1999.
The Company was formed to market name-brand marine watercraft and related
products via the Internet. No sales have occurred to date.
Estimates and assumptions are made by management relating to the reporting of
assets and liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in accordance with generally accepted
accounting principals. Actual results could differ from those estimates.
Recent Accounting Pronouncements include SOP 98-5, Reporting on the Costs of
Start-up Activities issued by AICPA in April 1998. SOP 98-5 requires expensing
all start-up costs as incurred. As of May 31, 1999, the Company has $5,200 in
start-up costs to date, and anticipates approximately $65,000 in initial start
up costs during the next 3 months.
NOTE 2 - Sale of Common Stock
In July 1999 the Company issued 19,923,946 shares to its Parent, in exchange for
its agreement to fund required start up expenses as needed. The May 31, 1999
balance sheet shows 1,000,000 shares deemed previously issued for the $1,000
start up capital previously contributed, and the 19,923,946 shares replaces this
earlier deemed issuance.
Parent is planning a sale of up to 7,471,480 shares of the Company to existing
Parent shareholders in a public offering, at a price not yet determined. In
connection with this stock.
<PAGE> 57
UBUYJAWS.com, Inc.
(Formerly GreatWhite.com, Inc.)
(A Development Stage Company)
Notes to Financial Statements
NOTE 2 - Sale of Common Stock (continued)
offering, Parent has signed an investment banking agreement calling for
compensation of 3% of cash raised, 1% of total Parent outstanding stock, 2% of
Company outstanding stock, and warrants to purchase another 2% of Parent stock
at current market value plus 15%. All such compensation will be recorded as
Company paid in capital and as a simultaneous reduction in paid in capital as
equity fund-raising costs.
NOTE 3 - Overhead Expenses
The Company currently has no revenues, separate offices or separate officers
from those of its Parent. All organizational, startup and operating expenses
have been and will be paid by Parent for the near-term future. All such costs
are being reported as incurred on Company books as paid-in capital.
<PAGE> 58
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
GreatWhite.com, Inc.
The undersigned, a natural person of the age of eighteen years or
more, acting as sole incorporator of a corporation under the provisions of
the Texas Business Corporation Act, adopts the following Articles of
Incorporation:
ARTICLE 1.
The name of the Corporation is GreatWhite.com, Inc..
ARTICLE 2.
The period of duration of the Corporation is perpetual.
ARTICLE 3.
The purpose for which the Corporation is organized is to engage in
any or all lawful business.
ARTICLE 4.
The total number of shares of stock which the Corporation shall have
authority to issue is 20,000,000 shares of common stock, par value $.001
per share (the "Common Stock"), and 5,000,000 shares of preferred stock,
par value $.001 per share (the "Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time
to time in one or more classes or series, each of which class or series
shall have such distinctive designation or title as shall be determined by
the Board of Directors of the Corporation ("Board of Directors") prior to
the issuance of any shares thereof. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no
voting powers, and such preferences and relative, participating, optional
or other special rights and such qualifications, limitations or
restrictions thereof, and shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preferred
Stock as may be adopted from time to time by the Board of Directors prior
to the issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State of
Texas.
<PAGE> 59
ARTICLE 5.
Section 5.1. Cumulative voting shall not be permitted.
Section 5.2. Preemptive rights shall not be permitted.
ARTICLE 6.
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of at least $1,000,
consisting of money, labor done or property actually received.
ARTICLE 7.
Without necessity for action by its shareholders, the Corporation
may purchase, directly or indirectly, its own shares to the extent of the
aggregate of unrestricted capital surplus available therefor and
unrestricted reduction surplus available therefor.
ARTICLE 8.
Section 8.1. The holders of at least a majority of the shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of the shareholders of the Corporation.
Section 8.2. No contract or other transaction between the Corporation
and one or more of its directors, officers or security holders or between
the Corporation and another corporation, partnership, joint venture, trust
or other enterprise of which one or more of the Corporation's directors,
officers or security holders are security holders, members, officers,
directors or employees or in which they are otherwise interested, directly
or indirectly, shall be invalid solely because of such relationship or
solely because such a director, officer or security holder is present or
participates in any meeting of the Board of Directors or Committee thereof
authorizing the contract or other transaction or solely because his or
their votes are counted for such purpose if (a) the material facts as to
his relationship or interest and as to the contract or other transaction
are known or disclosed to the Board of Directors or committee thereof, and
such board or committee in good faith authorizes the contract or other
transaction by the affirmative vote of a majority of the disinterested
directors even though the disinterested directors are less than a quorum;
or (b) the material facts as to his or their relationship or interest and
as to the contract or other transaction are known or disclosed to the
shareholders entitled to vote thereon, and the contract or other
transaction is approved in good faith by a vote of the shareholders; or
(c) the contract or other transaction is fair as to the Corporation as of
the time the Corporation enters into such contract or other transaction.
ARTICLE 9.
The address of the initial registered office of the Corporation is
208 Otis Drive; Waco, Texas 76712, and the name of the initial registered
agent of the Corporation at such address is Felicia Ursrey.
<PAGE> 60
ARTICLE 10.
The initial Board of Directors shall consist of two (2) members who
shall serve as directors until the first annual meeting of shareholders or
until their successors shall have been elected and qualified, and whose
names and addresses are as follows:
Name Address
Colin Smith 208 Otis Drive
Waco, Texas 76712
Chris Smith 208 Otis Drive
Waco, Texas 76712
The number of directors composing the Board of Directors may be
increased or decreased by the Board of Directors, but no decrease shall
have the effect of shortening the term of any incumbent director.
ARTICLE 11.
Any action required by the Texas Business Corporation Act, as
amended, to be taken at any annual or special meeting of shareholders of
the Corporation, or any action which may be taken at any annual or special
meeting of shareholders of the Corporation, may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder
or holders of shares having not less than the minimum number of votes that
would be necessary to take such action at a meeting at which the holders of
all shares entitled to vote on the action were present and voted.
<PAGE> 61
ARTICLE 12.
No director of the Corporation shall be liable to the Corporation or
its shareholders or members for monetary damages for any act or omission in
such director's capacity as a director, except for (i) a breach of such
director's duty of loyalty to the Corporation or its shareholders or
members; (ii) an act or omission not in good faith that constitutes a
breach of duty of the director to the Corporation, or an act or omission
that involves intentional misconduct or a knowing violation of the law;
(iii) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope
of the director's office; or (iv) an act or omission for which the
liability of a director is expressly provided by an applicable statute.
ARTICLE 13.
The Corporation shall indemnify all current and former directors and
officers of the Corporation to the fullest extent of the applicable law,
including, without limitation, Article 2.02-1 of the Texas Business
Corporation Act.
ARTICLE 14.
Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Board of Directors or
a committee thereof, the Chairman of the Board, President, or by the
holders of at least 30% of all the shares entitled to vote at the proposed
special meeting.
ARTICLE 15
The name and address of the incorporator of the Corporation is as follows:
Name Address
Felicia Ursrey 208 Otis Drive
Waco, Texas 76712
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of February,
1999.
/s/ FELICIA URSREY
FELICIA URSREY
<PAGE> 62
EXHIBIT 3.2
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
UBUYJAWS.com, Inc.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporations Act, the undersigned corporation adopts the following Articles
of Amendment to its Articles of Incorporation:
The following amendments and additions were adopted by the
corporation on May 26, 1999.
ARTICLE ONE
The name of the Corporation is GreatWhite.com, Inc.
ARTICLE TWO
The following amendments and additions were adopted by the Board of
Directors of the corporation on May 26, 1999.
The amendment alters in full Articles 1 and 4 of the original
Articles of Incorporation to read as follows:
ARTICLE 1
The name of the corporation is UBUYJAWS.com, Inc.
ARTICLE 4
The total number of shares of stock which the Corporation shall have
authority to issue is 50,000,000 shares of Common Stock, par value $.001
per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock,
par value $.001 per share (the "Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time
to time in one or more classes or series, each of which class or series
shall have such distinctive designation or title as shall be determined by
the Board of Directors of the Corporation ("Board of Directors") prior to
the issuance of any shares thereof. Each such class or series of Preferred
Stock shall have such voting powers, full or limited, or no voting powers,
and such preferences and relative, participating, optional or other special
rights and such qualifications, limitations or restrictions thereof, and
shall be stated in such resolution or resolutions providing for the issue
of such class or series of Preferred Stock as may be adopted from time to
time by the Board of Directors prior to the issuance of any shares thereof
pursuant to the authority hereby expressly vested in it, all in accordance
with the laws of the State of Texas.
ARTICLE THREE
Each statement made by these Amended Articles of Incorporation has
been effected in conformity with the provisions of the Texas Business
Corporations Act. These Articles of Amendment to the Articles of
Incorporation were adopted by unanimous consent of the Board of Directors.
No shares of Common Stock or Preferred Stock were issued at the time of
adoption of these Articles of Amendment.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of
June, 1999.
UBUYJAWS.com, Inc.
By: /s/ Christopher Smith
Name: Christopher Smith
Title: President, CEO & Chairman of the
Board
<PAGE> 63
EXHIBIT 3.3
BYLAWS
OF
UBUYJAWS.com, Inc.
a Texas corporation
ARTICLE 1.
DEFINITIONS
1.1 Definitions. Unless the context clearly requires otherwise,
in these Bylaws:
(a) "Board" means the board of directors of the Company.
(b) "Bylaws" means these bylaws as adopted by the Board and
includes amendments subsequently adopted by the Board or by the
Stockholders.
(c) "Certificate of Incorporation" means the Certificate of
Incorporation of UBUYJAWS.com, Inc. (fka Great White.com, Inc.) as
filed with the Secretary of State of the State of Texas and in-
cludes all amendments thereto and restatements thereof subsequently
filed.
(d) "Company" means UBUYJAWS.com, Inc., a Texas corporation.
(e) "Section" refers to sections of these Bylaws.
(f) "Stockholder" means stockholders of record of the
Company.
1.2 Offices. The title of an office refers to the person or
persons who at any given time perform the duties of that particular office
for the Company.
ARTICLE 2.
OFFICES
2.1 Principal Office. The Company may locate its principal office
within or without the state of incorporation as the Board may determine.
2.2 Registered Office. The registered office of the Company
required by law to be maintained in the state of incorporation may be, but
need not be, the same as the principal place of business of the Company.
The Board may change the address of the registered office from time to
time.
2.3 Other Offices. The Company may have offices at such other
places, either within or without the state of incorporation, as the Board
may designate or as the business of the Company may require from time to
time.
ARTICLE 3.
MEETINGS OF STOCKHOLDERS
3.1 Annual Meetings. The Stockholders of the Company shall hold
their annual meetings for the purpose of electing directors and for the
transaction of such other proper business as may come before such
meetings at such time, date and place as the Board shall determine by
resolution.
3.2 Special Meetings. Only the Board, the Chairman of the Board,
the President or a committee of the Board duly designated and whose powers
and authority include the power to call meetings may call special meetings
of the Stockholders of the Company at any time for any purpose or
purposes.
3.3 Place of Meetings. The Stockholders shall hold all meetings
at such places, within or without the State of Texas, as the Board or a
committee of the Board shall specify in the notice or waiver of notice for
such meetings.
3.4 Notice of Meetings. Except as otherwise required by law, the
Board or a committee of the Board shall give notice of each meeting of
Stockholders, whether annual or special, not less than 10 nor more than 60
days before the date of the meeting. The Board or a committee of the
Board shall deliver a notice to each Stockholder entitled to vote at such
meeting by delivering a typewritten or printed notice thereof to him
personally, or by depositing such notice in the United States mail, in a
postage prepaid envelope, directed to him at his address as it appears on
the records of the Company, or by transmitting a notice thereof to him at
such address by telegraph, telecopy, cable or wireless. If mailed,
notice is given on the date deposited in the United States mail, postage
prepaid, directed to the Stockholder at his address as it appears on the
records of the Company. An affidavit of the Secretary or an Assistant
Secretary or of the Transfer Agent of the Company that he has given notice
shall constitute, in the absence of fraud, prima facie evidence of the
facts stated therein.
<PAGE> 64
Every notice of a meeting of the Stockholders shall state the
place, date and hour of the meeting and, in the case of a special meeting,
also shall state the purpose or purposes of the meeting. Furthermore, if
the Company will maintain the list at a place other than where the meeting
will take place, every notice of a meeting of the Stockholders shall
specify where the Company will maintain the list of Stockholders entitled
to vote at the meeting.
3.5 Stockholder Notice. Subject to the Certificate of
Incorporation, the Stockholders who intend to nominate persons to the
Board of Directors or propose any other action at an annual meeting of
Stockholders must timely notify the Secretary of the Company of such
intent. To be timely, a Stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not
less than 60 days nor more than 90 days prior to the date of such meeting;
provided, however, that in the event that less than 75 days' notice of the
date of the meeting is given or made to Stockholders, notice by the
Stockholder to be timely must be received not later than the close of
business on the 15th day following the date on which such notice of the
date of the annual meeting was mailed. Such notice must be in writing and
must include a (i) a brief description of the business desired to the
brought before the annual meeting and the reasons for conducting such
business at the meeting; (ii) the name and record address of the
Stockholder proposing such business; (iii) the class, series and number of
shares of capital stock of the Company which are beneficially owned by the
Stockholder; and (iv) any material interest of the Stockholder in such
business. The Board of Directors reserves the right to refuse to submit
any such proposal to stockholders at an annual meeting if, in its
judgment, the information provided in the notice is inaccurate or
incomplete.
3.6 Waiver of Notice. Whenever these Bylaws require written
notice, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall constitute the
equivalent of notice. Attendance of a person at any meeting shall
constitute a waiver of notice of such meeting, except when the person
attends the meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is
not lawfully called or convened. No written waiver of notice need specify
either the business to be transacted at, or the purpose or purposes of any
regular or special meeting of the Stockholders, directors or members of a
committee of the Board.
<PAGE> 65
3.7 Adjournment of Meeting. When the Stockholders adjourn a
meeting to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting, the
Stockholders may transact any business which they may have transacted at
the original meeting. If the adjournment is for more than 30 days or, if
after the adjournment, the Board or a committee of the Board fixes a new
record date for the adjourned meeting, the Board or a committee of the
Board shall give notice of the adjourned meeting to each Stockholder of
record entitled to vote at the meeting.
3.8 Quorum. Except as otherwise required by law, the holders of a
majority of all of the shares of the stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes at any meeting of the Stockholders. In the absence of a quorum
at any meeting or any adjournment thereof, the holders of a majority of
the shares of stock entitled to vote who are present, in person or by
proxy, or, in the absence therefrom of all the Stockholders, any officer
entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting to another place, date or time.
If the chairman of the meeting gives notice of any adjourned
special meeting of Stockholders to all Stockholders entitled to vote
thereat, stating that the minimum percentage of stockholders for a quorum
as provided by Texas law shall constitute a quorum, then, except as
otherwise required by law, that percentage at such adjourned meeting shall
constitute a quorum and a majority of the votes cast at such meeting shall
determine all matters.
3.9 Organization. Such person as the Board may have designated
or, in the absence of such a person, the highest ranking officer of the
Company who is present shall call to order any meeting of the
Stockholders, determine the presence of a quorum, and act as chairman of
the meeting. In the absence of the Secretary or an Assistant Secretary of
the Company, the chairman shall appoint someone to act as the secretary of
the meeting.
3.10 Conduct of Business. The chairman of any meeting of
Stockholders shall determine the order of business and the procedure at
the meeting, including such regulations of the manner of voting and the
conduct of discussion as he deems in order.
3.11 List of Stockholders. At least 10 days before every meeting
of Stockholders, the Secretary shall prepare a list of the Stockholders
entitled to vote at the meeting or any adjournment thereof, arranged in
alphabetical order, showing the address of each Stockholder and the number
of shares registered in the name of each Stockholder. The Company shall
make the list available for examination by any Stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least 10 days prior to the meeting, either at a place within the city
where the meeting will take place or at the place designated in the
notice of the meeting.
<PAGE> 66
The Secretary shall produce and keep the list at the time and
place of the meeting during the entire duration of the meeting, and any
Stockholder who is present may inspect the list at the meeting. The list
shall constitute presumptive proof of the identity of the Stockholders
entitled to vote at the meeting and the number of shares each Stockholder
holds.
A determination of Stockholders entitled to vote at any
meeting of Stockholders pursuant to this Section shall apply to any
adjournment thereof.
3.12 Fixing of Record Date. For the purpose of determining
Stockholders entitled to notice of or to vote at any meeting of
Stockholders or any adjournment thereof, or Stockholders entitled to
receive payment of any dividend, or in order to make a determination of
Stockholders for any other proper purpose, the Board or a committee of
the Board may fix in advance a date as the record date for any such
determination of Stockholders. However, the Board shall not fix such
date, in any case, more than 60 days nor less than 10 days prior to the
date of the particular action.
If the Board or a committee of the Board does not fix a record
date for the determination of Stockholders entitled to notice of or to
vote at a meeting of Stockholders, the record date shall be at the close
of business on the day next preceding the day on which notice is given or
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held or the date on which the Board adopts
the resolution declaring a dividend.
3.13 Voting of Shares. Each Stockholder shall have one vote for
every share of stock having voting rights registered in his name on the
record date for the meeting. The Company shall not have the right to
vote treasury stock of the Company, nor shall another corporation have the
right to vote its stock of the Company if the Company holds, directly or
indirectly, a majority of the shares entitled to vote in the election of
directors of such other corporation. Persons holding stock of the Company
in a fiduciary capacity shall have the right to vote such stock. Persons
who have pledged their stock of the Company shall have the right to vote
such stock unless in the transfer on the books of the Company the pledgor
expressly empowered the pledgee to vote such stock. In that event, only
the pledgee, or his proxy, may represent such stock and vote thereon.
<PAGE> 67
A plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote shall determine
all elections and, except when the law or Certificate of Incorporation
requires otherwise, the affirmative vote of a majority of the shares
present in person or represented by proxy at the meeting and entitled to
vote shall determine all other matters.
Where a separate vote by a class or classes is required, a
majority of the outstanding shares of such class or classes, present in
person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter and the affirmative vote
of the majority of shares of such class or classes present in person or
represented by proxy at the meeting shall be the act of such class.
The Stockholders may vote by voice vote on all matters. Upon
demand by a Stockholder entitled to vote, or his proxy, the Stockholders
shall vote by ballot. In that event, each ballot shall state the name of
the Stockholder or proxy voting, the number of shares voted and such other
information as the Company may require under the procedure established for
the meeting.
3.14 Inspectors. At any meeting in which the Stockholders vote by
ballot, the chairman may appoint one or more inspectors. Each inspector
shall take and sign an oath to execute the duties of inspector at such
meeting faithfully, with strict impartiality, and according to the best of
his ability. The inspectors shall ascertain the number of shares
outstanding and the voting power of each; determine the shares represented
at a meeting and the validity of proxies and ballots; count all votes and
ballots; determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors;
and certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The certification
required herein shall take the form of a subscribed, written report
prepared by the inspectors and delivered to the Secretary of the Company.
An inspector need not be a Stockholder of the Company, and any officer
of the Company may be an inspector on any question other than a vote for
or against a proposal in which he has a material interest.
3.15 Proxies. A Stockholder may exercise any voting rights in
person or by his proxy appointed by an instrument in writing, which he or
his authorized attorney-in-fact has subscribed and which the proxy has
delivered to the secretary of the meeting pursuant to the manner
prescribed by law.
A proxy is not valid after the expiration of 13 months after
the date of its execution, unless the person executing it specifies
thereon the length of time for which it is to continue in force (which
length may exceed 12 months) or limits its use to a particular meeting.
Each proxy is irrevocable if it expressly states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in
law to support an irrevocable power.
The attendance at any meeting of a Stockholder who previously
has given a proxy shall not have the effect of revoking the same unless he
notifies the Secretary in writing prior to the voting of the proxy.
3.16 Action by Consent. Any action required to be taken at any
annual or special meeting of stockholders of the Company or any action
which may be taken at any annual or special meeting of such stockholders,
may be taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Company by delivery to its
registered office, its principal place of business, or an officer or agent
of the Company having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Company's registered
office shall be by hand or by certified or registered mail, return receipt
requested.
<PAGE> 68
Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within
60 days of the earliest dated consent delivered in the manner required by
this section to the Company, written consents signed by a sufficient
number of holders to take action are delivered to the Company by delivery
to its registered office, its principal place of business or an officer or
agent of the Company having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Company's
registered office shall be by hand or by certified or registered mail,
return receipt requested.
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE 4.
BOARD OF DIRECTORS
4.1 General Powers. The Board shall manage the property, business
and affairs of the Company.
4.2 Number. The number of directors who shall constitute the
Board shall equal not less than one nor more than 10, as the Board may
determine by resolution from time to time.
4.3 Election of Directors and Term of Office. The Stockholders of
the Company shall elect the directors at the annual or adjourned annual
meeting (except as otherwise provided herein for the filling of
vacancies). Each director shall hold office until his death, resignation,
retirement, removal, or disqualification, or until his successor shall
have been elected and qualified.
4.4 Resignations. Any director of the Company may resign at any
time by giving written notice to the Board or to the Secretary of the
Company. Any resignation shall take effect upon receipt or at the time
specified in the notice. Unless the notice specifies otherwise, the
effectiveness of the resignation shall not depend upon its acceptance.
4.5 Removal. Stockholders holding a majority of the outstanding
shares entitled to vote at an election of directors may remove any
director or the entire Board of Directors at any time, with or without
cause.
4.6 Vacancies. A majority of the remaining directors, although
less than a quorum, or a sole remaining director may fill any vacancy on
the Board, whether because of death, resignation, disqualification, an
increase in the number of directors, or any other cause. Any director
elected to fill a vacancy shall hold office until his death, resignation,
retirement, removal, or disqualification, or until his successor shall
have been elected and qualified.
4.7 Chairman of the Board. At the initial and annual meeting of
the Board, the directors may elect from their number a Chairman of the
Board of Directors. The Chairman shall preside at all meetings of the
Board and shall perform such other duties as the Board may direct. The
Board also may elect a Vice Chairman and other officers of the Board, with
such powers and duties as the Board may designate from time to time.
4.8 Compensation. The Board may compensate directors for their
services and may provide for the payment of all expenses the directors
incur by attending meetings of the Board or otherwise.
<PAGE> 69
ARTICLE 5.
MEETINGS OF DIRECTORS
5.1 Regular Meetings. The Board may hold regular meetings at such
places, dates and times as the Board shall establish by resolution. If
any day fixed for a meeting falls on a legal holiday, the Board shall hold
the meeting at the same place and time on the next succeeding business
day. The Board need not give notice of regular meetings.
5.2 Place of Meetings. The Board may hold any of its meetings in
or out of the State of Texas, at such places as the Board may designate,
at such places as the notice or waiver of notice of any such meeting may
designate, or at such places as the persons calling the meeting may
designate.
5.3 Meetings by Telecommunications. The Board or any committee of
the Board may hold meetings by means of conference telephone or similar
telecommunications equipment that enable all persons participating in the
meeting to hear each other. Such participation shall constitute presence
in person at such meeting.
5.4 Special Meetings. The Chairman of the Board, the President,
or one-half of the directors then in office may call a special meeting of
the Board. The person or persons authorized to call special meetings of
the Board may fix any place, either in or out of the State of Texas as the
place for the meeting.
5.5 Notice of Special Meetings. The person or persons calling a
special meeting of the Board shall give written notice to each director of
the time, place, date and purpose of the meeting of not less than three
business days if by mail and not less than 24 hours if by telegraph or in
person before the date of the meeting. If mailed, notice is given on the
date deposited in the United States mail, postage prepaid, to such
director. A director may waive notice of any special meeting, and any
meeting shall constitute a legal meeting without notice if all the
directors are present or if those not present sign either before or after
the meeting a written waiver of notice, a consent to such meeting, or an
approval of the minutes of the meeting. A notice or waiver of notice need
not specify the purposes of the meeting or the business which the Board
will transact at the meeting.
5.6 Waiver by Presence. Except when expressly for the purpose of
objecting to the legality of a meeting, a director's presence at a meeting
shall constitute a waiver of notice of such meeting.
5.7 Quorum. A majority of the directors then in office shall
constitute a quorum for all purposes at any meeting of the Board. In the
absence of a quorum, a majority of directors present at any meeting may
adjourn the meeting to another place, date or time without further notice.
No proxies shall be given by directors to any person for purposes of
voting or establishing a quorum at a directors meetings.
<PAGE> 70
5.8 Conduct of Business. The Board shall transact business in
such order and manner as the Board may determine. Except as the law
requires otherwise, the Board shall determine all matters by the vote of a
majority of the directors present at a meeting at which a quorum is
present. The directors shall act as a Board, and the individual direc-
tors shall have no power as such.
5.9 Action by Consent. The Board or a committee of the Board may
take any required or permitted action without a meeting if all members of
the Board or committee consent thereto in writing and file such consent
with the minutes of the proceedings of the Board or committee.
ARTICLE 6.
COMMITTEES
6.1 Committees of the Board. The Board may designate, by a vote
of a majority of the directors then in office, committees of the Board.
The committees shall serve at the pleasure of the Board and shall possess
such lawfully delegable powers and duties as the Board may confer.
6.2 Selection of Committee Members. The Board shall elect by a
vote of a majority of the directors then in office a director or directors
to serve as the member or members of a committee. By the same vote, the
Board may designate other directors as alternate members who may replace
any absent or disqualified member at any meeting of a committee. In the
absence or disqualification of any member of any committee and any
alternate member in his place, the member or members of the committee
present at the meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may appoint by unanimous vote another member
of the Board to act at the meeting in the place of the absent or
disqualified member.
6.3 Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as the law or these Bylaws require otherwise.
Each committee shall make adequate provision for notice of all meetings
to members. A majority of the members of the committee shall constitute a
quorum, unless the committee consists of one or two members. In that
event, one member shall constitute a quorum. A majority vote of the mem-
bers present shall determine all matters. A committee may take action
without a meeting if all the members of the committee consent in writing
and file the consent or consents with the minutes of the proceedings of
the committee.
6.4 Authority. Any committee, to the extent the Board provides,
shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Company, and may
authorize the affixation of the Company's seal to all instruments which
may require or permit it. However, no committee shall have any power or
authority with regard to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
Stockholders the sale, lease or exchange of all or substantially all of
the Company's property and assets, recommending to the Stockholders a
dissolution of the Company or a revocation of a dissolution of the
Company, or amending these Bylaws of the Company. Unless a resolution of
the Board expressly provides, no committee shall have the power or auth-
ority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger.
6.5 Minutes. Each committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
<PAGE> 71
ARTICLE 7.
OFFICERS
7.1 Officers of the Company. The officers of the Company shall
consist of a President, a Secretary and such Vice Presidents, Assistant
Secretaries, Assistant Treasurers, and other officers as the Board may
designate and elect from time to time. The same person may hold at the
same time any two or more offices, except the offices of President and
Secretary.
7.2 Election and Term. The Board shall elect the officers of the
Company. Each officer shall hold office until his death, resignation,
retirement, removal or disqualification, or until his successor shall have
been elected and qualified.
7.3 Compensation of Officers. The Board shall fix the
compensation of all officers of the Company. No officer shall serve the
Company in any other capacity and receive compensation, unless the Board
authorizes the additional compensation.
7.4 Removal of Officers and Agents. The Board may remove any
officer or agent it has elected or appointed at any time, with or without
cause.
7.5 Resignation of Officers and Agents. Any officer or agent the
Board has elected or appointed may resign at any time by giving written
notice to the Board, the Chairman of the Board, the President, or the
Secretary of the Company. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified. Unless
otherwise specified in the notice, the Board need not accept the
resignation to make it effective.
7.6 Bond. The Board may require by resolution any officer,
agent, or employee of the Company to give bond to the Company, with
sufficient sureties conditioned on the faithful performance of the duties
of his respective office or agency. The Board also may require by
resolution any officer, agent or employee to comply with such other
conditions as the Board may require from time to time.
7.7 President. The President shall be the chief operating officer
of the Company and, subject to the Board's control, shall supervise and
direct all of the business and affairs of the Company. When present, he
shall sign (with or without the Secretary, an Assistant Secretary, or any
other officer or agent of the Company which the Board has authorized)
deeds, mortgages, bonds, contracts or other instruments which the Board
has authorized an officer or agent of the Company to execute. However,
the President shall not sign any instrument which the law, these Bylaws,
or the Board expressly require some other officer or agent of the Company
to sign and execute. In general, the President shall perform all duties
incident to the office of President and such other duties as the Board may
prescribe from time to time.
<PAGE> 72
7.8 Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice Presidents in
the order of their length of service as Vice Presidents, unless the Board
determines otherwise, shall perform the duties of the President. When
acting as the President, a Vice President shall have all the powers and
restrictions of the Presidency. A Vice President shall perform such other
duties as the President or the Board may assign to him from time to time.
7.9 Secretary. The Secretary shall (a) keep the minutes of the
meetings of the Stockholders and of the Board in one or more books for
that purpose, (b) give all notices which these Bylaws or the law requires,
(c) serve as custodian of the records and seal of the Company, (d) affix
the seal of the corporation to all documents which the Board has
authorized execution on behalf of the Company under seal, (e) maintain a
register of the address of each Stockholder of the Company, (f) sign,
with the President, a Vice President, or any other officer or agent of the
Company which the Board has authorized, certificates for shares of the
Company, (g) have charge of the stock transfer books of the Company, and
(h) perform all duties which the President or the Board may assign to him
from time to time.
7.10 Assistant Secretaries. In the absence of the Secretary or in
the event of his death, inability or refusal to act, the Assistant
Secretaries in the order of their length of service as Assistant
Secretary, unless the Board determines otherwise, shall perform the
duties of the Secretary. When acting as the Secretary, an Assistant
Secretary shall have the powers and restrictions of the Secretary. An
Assistant Secretary shall perform such other duties as the President,
Secretary or Board may assign from time to time.
7.11 Treasurer. The Treasurer shall (a) have responsibility for
all funds and securities of the Company, (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, (c)
deposit all moneys in the name of the Company in depositories which the
Board selects, and (d) perform all of the duties which the President or
the Board may assign to him from time to time.
7.12 Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the Assistant
Treasurers in the order of their length of service as Assistant
Treasurer, unless the Board determines otherwise, shall perform the
duties of the Treasurer. When acting as the Treasurer, an Assistant
Treasurer shall have the powers and restrictions of the Treasurer. An
Assistant Treasurer shall perform such other duties as the Treasurer, the
President, or the Board may assign to him from time to time.
7.13 Delegation of Authority. Notwithstanding any provision of
these Bylaws to the contrary, the Board may delegate the powers or duties
of any officer to any other officer or agent.
7.14 Action with Respect to Securities of Other Corporations.
Unless the Board directs otherwise, the President shall have the power to
vote and otherwise act on behalf of the Company, in person or by proxy, at
any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which the Company holds
securities. Furthermore, unless the Board directs otherwise, the
President shall exercise any and all rights and powers which the Company
possesses by reason of its ownership of securities in another corporation.
7.15 Vacancies. The Board may fill any vacancy in any office
because of death, resignation, removal, disqualification or any other
cause in the manner which these Bylaws prescribe for the regular
appointment to such office.
<PAGE> 73
ARTICLE 8.
CONTRACTS, LOANS, DRAFTS,
DEPOSITS AND ACCOUNTS
8.1 Contracts. The Board may authorize any officer or officers,
agent or agents, to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Company. The Board may make
such authorization general or special.
8.2 Loans. Unless the Board has authorized such action, no
officer or agent of the Company shall contract for a loan on behalf of the
Company or issue any evidence of indebtedness in the Company's name.
8.3 Drafts. The President, any Vice President, the Treasurer, any
Assistant Treasurer, and such other persons as the Board shall determine
shall issue all checks, drafts and other orders for the payment of money,
notes and other evidences of indebtedness issued in the name of or
payable by the Company.
8.4 Deposits. The Treasurer shall deposit all funds of the
Company not otherwise employed in such banks, trust companies, or other
depositories as the Board may select or as any officer, assistant, agent
or attorney of the Company to whom the Board has delegated such power may
select. For the purpose of deposit and collection for the account of the
Company, the President or the Treasurer (or any other officer, assistant,
agent or attorney of the Company whom the Board has authorized) may
endorse, assign and deliver checks, drafts and other orders for the
payment of money payable to the order of the Company.
8.5 General and Special Bank Accounts. The Board may authorize
the opening and keeping of general and special bank accounts with such
banks, trust companies, or other depositories as the Board may select or
as any officer, assistant, agent or attorney of the Company to whom the
Board has delegated such power may select. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem
expedient.
<PAGE> 74
ARTICLE 9.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
9.1 Certificates for Shares. Every owner of stock of the Company
shall have the right to receive a certificate or certificates, certifying
to the number and class of shares of the stock of the Company which he
owns. The Board shall determine the form of the certificates for the
shares of stock of the Company. The Secretary, transfer agent, or regis-
trar of the Company shall number the certificates representing shares of
the stock of the Company in the order in which the Company issues them.
The President or any Vice President and the Secretary or any Assistant
Secretary shall sign the certificates in the name of the Company. Any or
all certificates may contain facsimile signatures. In case any officer,
transfer agent, or registrar who has signed a certificate, or whose
facsimile signature appears on a certificate, ceases to serve as such
officer, transfer agent, or registrar before the Company issues the
certificate, the Company may issue the certificate with the same effect as
though the person who signed such certificate, or whose facsimile signa-
ture appears on the certificate, was such officer, transfer agent, or registrar
at the date of issue. The Secretary, transfer agent, or registrar of the
Company shall keep a record in the stock transfer books of the Company of the
names of the persons, firms or corporations owning the stock represented by the
certificates, the number and class of shares represented by the certificates and
the dates thereof and, in the case of cancellation, the dates of cancellation.
The Secretary, transfer agent, or registrar of the Company shall cancel every
certificate surrendered to the Company for exchange or transfer. Except in the
case of a lost, destroyed, stolen or mutilated certificate, the Secretary,
transfer agent, or registrar of the Company shall not issue a new certificate in
exchange for an existing certificate until he has canceled the existing
certificate.
9.2 Transfer of Shares. A holder of record of shares of the Company's
stock, or his attorney-in-fact authorized by power of attorney duly executed and
filed with the Secretary, transfer agent or registrar of the Company, may
transfer his shares only on the stock transfer books of the Company. Such
person shall furnish to the Secretary, transfer agent, or registrar of the
Company proper evidence of his authority to make the transfer and shall properly
endorse and surrender for cancellation his existing certificate or certificates
for such shares. Whenever a holder of record of shares of the Company's stock
makes a transfer of shares for collateral security, the Secretary, transfer
agent, or registrar of the Company shall state such fact in the entry of
transfer if the transferor and the transferee request.
9.3 Lost Certificates. The Board may direct the Secretary, transfer
agent, or registrar of the Company to issue a new certificate to any holder of
record of shares of the Company's stock claiming that he has lost such
certificate, or that someone has stolen, destroyed or mutilated such
certificate, upon the receipt of an affidavit from such holder to such fact.
When authorizing the issue of a new certificate, the Board, in its discretion
may require as a condition precedent to the issuance that the owner of such
certificate give the Company a bond of indemnity in such form and amount as the
Board may direct.
9.4 Regulations. The Board may make such rules and regulations, not
inconsistent with these Bylaws, as it deems expedient concerning the issue,
transfer and registration of certificates for shares of the stock of the
corporation. The Board may appoint or authorize any officer or officers to
appoint one or more transfer agents, or one or more registrars, and may require
all certificates for stock to bear the signature or signatures of any of them.
9.5 Holder of Record. The Company may treat as absolute owners of
shares the person in whose name the shares stand of record as if that person had
full competency, capacity and authority to exercise all rights of ownership,
despite any knowledge or notice to the contrary or any description indicating a
representative, pledge or other fiduciary relation, or any reference to any
other instrument or to the rights of any other person appearing upon its record
or upon the share certificate. However, the Company may treat any person
furnishing proof of his appointment as a fiduciary as if he were the holder of
record of the shares.
9.6 Treasury Shares. Treasury shares of the Company shall consist of
shares which the Company has issued and thereafter acquired but not canceled.
Treasury shares shall not carry voting or dividend rights.
<PAGE> 75
ARTICLE 10.
INDEMNIFICATION
10.1 The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner in which
he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
10.2 The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
10.3 To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections 10.1 and 10.2 of this Article, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
10.4 Any indemnification under subsections 10.1 and 10.2 of this Article
(unless ordered by a court) shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections 10.1 and 10.2 of this
Article. Such determination shall be made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
10.5 Expenses (including attorneys' fees) incurred by an officer or
director in defending in a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company as authorized by this Article. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
10.6 The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
<PAGE> 76
10.7 The Company shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under this Article.
10.8 For purposes of this section references to "the Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this Article with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
10.9 The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
10.10 Nothing contained in this Article 10, or elsewhere in these Bylaws,
shall operate to indemnify any director or officer is such indemnification is
contrary to law, either as a matter of public policy, or under the provisions of
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or any other applicable state or Federal law.
<PAGE> 77
ARTICLE 11.
TAKEOVER OFFERS
In the event the Company receives a takeover offer, the Board of Directors
shall consider all relevant factors in evaluating such offer, including, but not
limited to, the terms of the offer, and the potential economic and social impact
of such offer on the Company's stockholders, employees, customers, creditors and
community in which it operates.
ARTICLE 12.
NOTICES
12.1 General. Whenever these Bylaws require notice to any Stockholder,
director, officer or agent, such notice does not mean personal notice. A person
may give effective notice under these Bylaws in every case by depositing a
writing in a post office or letter box in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram addressed to such Stockholder, director, officer
or agent at his address on the books of the Company. Unless these Bylaws
expressly provide to the contrary, the time when the person sends notice shall
constitute the time of the giving of notice.
12.2 Waiver of Notice. Whenever the law or these Bylaws require notice,
the person entitled to said notice may waive such notice in writing, either
before or after the time stated therein.
ARTICLE 13.
MISCELLANEOUS
13.1 Facsimile Signatures. In addition to the use of facsimile
signatures which these Bylaws specifically authorize, the Company may use such
facsimile signatures of any officer or officers, agents or agent, of the Company
as the Board or a committee of the Board may authorize.
13.2 Corporate Seal. The Board may provide for a suitable seal
containing the name of the Company, of which the Secretary shall be in charge.
The Treasurer, any Assistant Secretary, or any Assistant Treasurer may keep and
use the seal or duplicates of the seal if and when the Board or a committee of
the Board so directs.
13.3 Fiscal Year. The Board shall have the authority to fix and change
the fiscal year of the Company.
ARTICLE 14.
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, the
Stockholders or the Board may amend or repeal these Bylaws at any meeting.
The undersigned hereby certifies that the foregoing constitutes a true and
correct copy of the Bylaws of the Company as adopted by the Directors on the
____ day of May, 1999.
Executed as of this ______ day of May, 1999.
/s/Christopher C. Smith
Christopher C. Smith, Chief Executive
Officer
<PAGE> 78
EXHIBIT 4.1
- -----------------------------------------------------------------------
UBUYJAWScom, Inc.
Incorporated under the laws of the State of Texas
50,000,000 shares common stock authorized, $.001 par value
5,000,000 shares preferred stock authorized, $.001 par value
CUSIP NO.
Number Shares
This certifies that:
Is the record holder of:
- Shares of UBUYJAWS.com, Inc. Common Stock -
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered with the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly officers.
Dated:
/s/Felicia J. Ursrey /s/Christopher Smith
Secretary President
Corporate
Seal
<PAGE> 79
- -----------------------------------------------------------------------
Exhibit 8.1
[LETTERHEAD OF MALONE & BAILEY, PLLC]
July 9, 1999
To the Board of Directors and Shareholders
UBUYJAWS.com, Inc.
Waco, Texas
You have requested our opinion on behalf of Great White Marine and Recreation,
Inc. (a Nevada corporation) (?Great White?) and its shareholders regarding the
material federal income tax consequences resulting from the distribution of
"Right Units which are for sale to Great White shareholders for up to 2,490,493
shares of common shares, 1,660,329 shares of convertible preferred Company
stock, and warrants covering up to an additional 3,320,658 shares at certain
higher prices ("Distribution"). This distribution of right units will occur in
July or August 1999 as a stock dividend.
The Distribution would represent about 18% of total outstanding Company stock as
of July 9, 1999, if all right units were purchased, but no warrants were
exercised.
Opinions Requested
- - - - - - - - - -
Specifically, you have asked us to address the following issues:
1. Whether gain or loss will be recognized by any current holders of any
Great White stock.
2. Whether there are any tax consequences to the Company or to Great White.
<PAGE> 80
Conclusions
- - - - - -
Our opinions are based solely upon:
a) The material facts as described in the Form SB-2 accompanying this opinion
and filed with the Securities and Exchange Commission on or about July 13, 1999
b) Management's representations as to the valuation of the right units as of
the distribution date; and
c) Relevant current provisions of the Internal Revenue Code of 1986, as
amended, Treasury Regulations thereunder (including proposed and temporary
Treasury Regulations), and interpretations of the foregoing as expressed in
court decisions, applicable legislative history, and the administrative rulings
and practices of the IRS.
It is our opinion, based upon the facts, assumptions, and representations
contained herein, that:
1. The Distribution is a taxable property distribution to the shareholders of
Great White. Thus, each shareholder must include the value of the options he or
she receives to purchase one or more right units as gross income to the extent
that such value exceeds the basis in his or her Great White stock. However,
because the value of the option to purchase the "Right Units? is nominal, and
because any such value may be first deducted from the basis of any Great White
stock held by Great White shareholders before any taxable income results, the
tax consequences to any Great White shareholder are nil.
2. The Distribution is not a taxable transaction to either the Company or
Great White.
The Transaction
- - - - - - - -
The Company is offering an approximate 45-day option to purchase up to 1,660,329
"Right Units.? The option to purchase one right unit at a specified price will
be offered for every 12 shares owned by current Great White shareholders. Each
right unit will consist of 1.5 shares of Company common stock, one share of
Company convertible preferred stock, and two warrants, each of which will allow
the holder to purchase one additional share of Common stock at higher, fixed
prices over a 5-year period.
<PAGE> 81
Representations
- - - - - - - -
1. Company management have determined the valuation of such right units to be
equal to their option price, or $4.25 per right unit, based on their subjective
assessment of Company business prospects and status as a development stage
company.
2. Right units will only be offered to Great White shareholders as of a
specified record date, and only pro rata to their ownership of Great White
stock.
3. A separate trading market for the right units could develop.
4. Great White has signed an agreement to sell on fair terms to the Company
and not to compete with the Company. In addition, Great White has committed to
invest up to $122,000 in the Company to fund operational start up costs. In
exchange, Great White has received 19,923,946 shares of Company stock.
5. There are no plans by Great White to purchase any part of these right
units, or to acquire additional stock in the Company.
6. Neither the Company nor Great White is an investment company as defined in
IRC section 368(a)(2)(F)(iii) and (iv).
Caveats and Limitations
- - - - - - - - - - - -
(1) These provisions and interpretations are subject to change, which may or
may not be retroactive in effect, that might result in material modifications of
our opinion. Our opinion does not foreclose the possibility of a contrary
determination by the IRS or a court of competent jurisdiction, or of a contrary
position taken by the IRS or the Treasury Department in regulations or rulings
issued in the future. In this regard, an opinion of counsel with respect to an
outcome on the merits with respect to such issue, is not binding on the IRS or
the courts, and is not a guarantee that the IRS will not assert a contrary
position with respect to such issue or that a court will not sustain such a
position asserted by the IRS.
(2) This opinion does not address any state, local or other tax consequences
that may result from the transaction set forth above.
<PAGE> 82
(3) This opinion does not address any transactions other than the single
distribution described above, or any transactions whatsoever, if the assumptions
and representations set forth herein are not true and accurate at all relevant
times. In the event any one of the assumptions or representations is incorrect,
the conclusions reached in this opinion might be adversely affected.
(4) This opinion is based on the transaction as described in the document we
reviewed (listed above). Should the actual documents be revised again, the
conclusions in this opinion could be adversely affected.
(5) Malone & Bailey, PLLC consents to referencing this opinion in the
Company's Form SB-2 referred to above and to the filing of this opinion as an
exhibit to the Registration Statement.
(6) We have relied upon the representations set forth in the transaction
documents set forth in the transaction documents regarding matters of law
outside the tax area including, for example, the validity of (1) the
corporations involved in the proposed transactions, and (2) the agreements
including the appropriate filings of each with the federal and state government
agencies as appropriate.
* * * * * * * * * * * * *
If you have any questions, please call John C. Malone at (713) 840-1210.
Sincerely,
/s/ Malone & Bailey, PLLC
<PAGE> 83
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of UBUYJAWS.com, Inc. on
Form SB-2 of our report dated June 18, 1999, appearing in the Prospectus, which
is a part of this Registration Statement, and to the references to us under the
headings "Tax Opinion" and "Experts" in such Prospectus.
Malone & Bailey, PLLC
Houston, Texas
July 13, 1999
<PAGE> 84
EXHIBIT 27.1
Ubuyjaws.com, Inc. Item 601(c) of Regulation S-B
Commercial and Industrial Companies
Article 5 of Regulation S-X
Item Number Amount
5-02(1) 1,000
5-02(2) 0
5-02((3)(a) 0
5-02(4) 0
5-02(6) 0
5-02(9) 6,200
5-02(13) 0
5-02(14) 0
5-02(18) 6,200
5-02(21) 5,200
5-02(22) 0
5-02(28) 0
5-02(29) 0
5-02(30) 1,000
5-02(31) 0
5-02(32) 6,200
5-03(b)1(a) 0
5-03(b)1 0
5-03(b)2(1) 0
5-03(b)2 0
5-03(b)3 5,200
5-03(b)5 0
5-03(b)(8) 0
5-03(b)(10) (5,200)
5-03(b)(11) 0
5-03(b)(14) (5,200)
5-03(b)(15) 0
5-03(b)(17) 0
5-03(b)(18) 0
5-03(b)(19) (5,200)
5-03(b)(20) n/a
5-03(b)(20) n/a
